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Jerry Brown Sworn in as Governor of California; No Buy Zone?; Dems Planning Health Care Fight
Aired January 03, 2011 - 14:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(JOINED IN PROGRESS)
ALI VELSHI, CNN ANCHOR: We're away from the inauguration of California Governor Jerry Brown. He is one of five states that are swearing in new governors. California is one of them.
Nevada, Wyoming, Wisconsin and Minnesota are under new management as well. And I mean new. Only in Nevada is the incoming governor, Brian Sandoval, from the same party as the ex-governor.
But as so often happens, the spotlight is on California, where "The Governator," Arnold Schwarzenegger is handing over power to the oldest man ever to hold that office. And that is Jerry Brown.
Back in the '70s, Brown was governor in California. He was the youngest governor, by the way, since the 1800s. He's taking on a fiscal mess, by the way, that Schwarzenegger not only couldn't conquer, he could barely contain.
Now, what was formerly the Golden State is staring at a $28 billion shortfall over the next year and a half. That's not the sum of Schwarzenegger's legacy, by the way. Environmentalists salute his attention to global warming and renewable energy. He signed a $40 billion measure to rebuild California's infrastructure, and he changed the rules for primary elections and the mapping of legislative districts.
Now comes term number three for Jerry Brown. I know we said he was just elected, but he was already the governor.
Casey Wian has got that from the L.A. bureau, where he's watching events upstate.
We're very soon, Casey, going to see this unfold, Jerry Brown being sworn in as governor again. Can he or anybody, for that matter, fix the mess that California is in?
CASEY WIAN, CNN CORRESPONDENT: Well, it certainly seems to be a very, very difficult problem. You know, Governor Arnold Schwarzenegger -- former Governor Arnold Schwarzenegger -- ran on a platform he was going to help clean up California's fiscal mess, and it's only gotten worse since he's been in office.
Of course, Jerry Brown does have a lot of experience dealing with the budget in the state of California, the complex budget in this state. Of course it was much smaller when he was governor in the late '70s and early '80s.
He's also a Democrat, which may help him, because Democrats are in a majority in the state legislature. And that's one of the difficulties that Governor Arnold Schwarzenegger had, was trying to get any budget reform measures through that state legislature.
He came in with a lot of Hollywood imagery. At one point he took "Conan the Barbarian's" sword off the wall of his office and said he was going to start slashing the budget where it needed to be slashed.
Well, he never got many of those measures through, and the budget was in deficit every single year. And it was late, delayed because of California's sort of unique legislative situation, where it takes a two-thirds majority of the state government to pass any tax increases. And that's really made it difficult to close this budget gap that gets bigger and bigger every year -- Ali.
VELSHI: So what's the sense, Casey? Is Brown taking over at a time when, sort of, they're at bottom and things are likely to improve, or has he got to do some very, very specific things to try and get California's economy, one of the biggest in the country, back on track?
WIAN: Part of the sense is it can't get much worse. But Governor Brown to be, I suppose I should say, has been careful to try to manage expectations.
He went around the state holding a series of conferences to try to figure out how to deal with this budget mess, and during one he was welcomed to the stage with loud applause. And he said, "You better hold that applause once you see the budget that I'm going to propose."
So he's saying that there are going to be some significant cuts in the state budget, cuts to health care programs, cuts to colleges, cuts to local governments. He has not addressed the issue of taxes. A lot of folks are expecting that he's going to have to propose either some new taxes or rollbacks of tax cuts, sort of similar to what's happened with the Obama administration nationally.
We're waiting to see what he's going to propose. We're not going to have to wait for too much longer. He's expected to propose his first budget within about 10 days -- Ali.
VELSHI: Right. It was interesting, because California was a prelude to what we saw in England with the increase of tuition. California has a state college system that was renowned for its quality and its low tuition. And that increased during Governor Schwarzenegger's terms. So, education, health care, all of these things under pressure in California, as it is across the country.
Casey, good to see you. We will stay on top of this with you. We'll watch that inauguration as it begins.
Thanks very much.
Casey Wian. Hey, our "Sound Effect" is a mystery. Who or what killed thousands of blackbirds and starlings in a single town in a single night in Arkansas? It happened just before the town of Beebe rang in the new year, and the timing of that might be a clue. Wildlife experts theorize that the birds were scared to death by fireworks.
Here's a spokesman for the Arkansas Game and Fish Commission this morning on CNN.
(BEGIN VIDEO CLIP)
KEITH STEPHENS, ARKANSAS GAME & FISH COMMISSION: Well, this is a rural area. These blackbirds tend to congregate in areas where you're going to have grains from agricultural fields, and 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. Disease is the likely culprit there.
The Navy is launching an investigation into some very inappropriate video shot and shown aboard a U.S. aircraft carrier. They were made back in 2006 and 2007, but they only went public this weekend.
One of the main men in the videos, Captain Owen Honors, at the time, second in command of the USS Enterprise, now commands the carrier. He and his members of staff are shown cursing and apparently trying to be funny, but there are also anti-gay slurs, simulated sex acts, and what appears to be two female sailors in a shower together.
More than nine years after 9/11, President Obama signed into law health coverage for first responders to Ground Zero. Now, the measure 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 it was closing. So an aide traveled to Hawaii, brought it out just in time.
The bill allots more than $4 billion for health consequences related to the World Trade Center disaster.
Pharmaceutical giant Johnson & Johnson is teaming up with researchers on a super-sensitive cancer blood test. Scientists at Massachusetts General Hospital have already developed the prototype, a microchip that can detect trace amount of cancer cells in the bloodstream. They've experimented with it pretty successfully.
Now the $30 billion deal with J&J is aimed at refining the technology for commercial use. In other words, making it better and hopefully cheaper. The hope is that doctors will be able to personalize it and to monitor people's treatment.
Investigators in New York want to know exactly what it was going on during that massive snowstorm last week. They're checking out a report from "The New York Post" that says some of the sanitation supervisors who were supposed to making sure the snow got moved instead were downing beers in their city-owned vehicle.
Those investigations are asking city employees to spill their guts in the matter. The Department of Sanitation was already coming under fire for their blizzard response even before the latest allegation. And in New York, it is the Department of Sanitation that is responsible for snow removal.
Well, cheap airfares may be a thing of the past. Why it may be much more difficult for you to buy low-cost flights online, next.
But first, you're looking live at the inauguration of California Governor Jerry Brown. When he gives his address, we'll bring it to you live.
(COMMERCIAL BREAK)
VELSHI: All right. We're looking at Sacramento. This is the National Anthem being sung at the inauguration of Jerry Brown.
(SINGING)
(APPLAUSE)
VELSHI: And that is the National Anthem being performed in Sacramento, at the swearing-in inauguration of Governor Jerry Brown. This would be his third term as California governor.
He'll speak in a few minutes. As you know, he's got some major challenges in that state, very specific to that state, but a microcosm of what's going on across the country economically and politically.
We're going to listen in when Jerry Brown speaks. We'll come right back to this.
Hey, for those of you traveling, there's a brouhaha brewing between the airlines and online travel sites. For you, it could make finding a cheap flight harder. Here's the latest news.
Expedia.com has taken American Airlines' fares and schedules off its site. Expedia says American Airlines' new pricing system is anti- consumer and anti-choice. American Airlines pulled itself off Orbitz earlier in December, and this whole thing continues to develop.
Henry Harteveldt is the vice president and principal analyst at Forrester Research. He follows the airline industry. He joins me now from San Francisco.
Henry, let's talk about the effect -- at the moment, if you want to find the cheapest flight to somewhere, if it involves an airline that's pulled itself off of one of these sites, or American, which has now been pulled off Expedia, you can do it. You just have to go to more sites and compare. There are some discount airlines that already don't put themselves on some of these main sites.
What effect will it actually have on the cost of travel, if any?
HENRY HARTEVELDT, VICE PRESIDENT, FORRESTER RESEARCH: Well, the bigger issue on the cost of travel is going to be the price of fuel. But it certainly is going to make it more difficult, as you pointed out, Ali.
If you really want to find the most fares, you're going to have to shop sites like Bing Travel, FareCompare.com, or Kayak.com, to compare all airlines. And by the way, some airlines like Southwest don't sell through even those sites.
VELSHI: Right.
HARTEVELDT: You're going to have to go to their Web sites and check them as well. So it takes more work.
VELSHI: And they do -- Southwest does quite well, and has done quite well for never being on any of these sites. So what's the -- what do we think the future holds here? Are we going backwards, where you have to actually call different airlines or, in this case, go to their sites in order to be able to find the best fare?
HARTEVELDT: I think that the future is going to mean much more fragmentation in terms of how we find our airline fares. So be prepared to do more work in the future. Maybe not this year, 2011, but certainly over the next couple of years you'll probably see -- in fact, I believe it's likely you'll see fewer airlines on the travel agency sites unless the airlines and the travel agencies can figure out a cost-effective way to do business together.
VELSHI: All right. You did say something, though, that worries me more. And that is, we're looking at oil that's above $90 a barrel right now. We've seen -- anybody who drives sees their gas prices going up.
This is, of course, a major, major cost for airlines. And we spent a few years watching those surcharges being added to fares.
Are we likely to see fares increasing?
HARTEVELDT: Yes, you are. In fact, just last week, American and other airlines passed through an increase of about $20 roundtrip on domestic fares. Jet fuel -- I checked the (INAUDIBLE) Web site this morning -- jet fuel is above $107 a barrel. So the airlines actually pay premium for oil. That means cheap fares will be more difficult to find and, frankly, you should expect airfares to go up this year.
VELSHI: Having followed this the last few years, I mean, we went from a really catastrophic time for the airline industry, the last decade has not been great for them. But now we're seeing airlines that are profitable, we see airplanes that are completely full.
If you were to sort of look out for the next few years, what is air travel going to look like?
HARTEVELDT: Well, air travel is going to look like just what you said, fewer flights, more crowded planes, and many more of these optional products being sold to you. That's where the airlines are making their money, through these checked baggage fees, ticket change fees, selling the meals on the plane, and other things like that. So expect airlines to become much more retailer-like.
VELSHI: So the frugal traveler is going to have to do a little bit more work, possibly, to continue to be a frugal traveler, to find their fares and to get on the airline that doesn't charge them as much, or where they can get away with paying less in terms of these fees. It's going to be an interesting time for all of us, Henry.
Thanks so much for joining us today.
HARTEVELDT: It's going to take a lot more work. A lot more work.
VELSHI: Yes, it's going to do that.
Henry Harteveldt is the vice president and principal analyst at Forrester Research, joining me live from San Francisco.
Let's stay in California, actually. Let's go to Sacramento. That is the swearing in of Governor Jerry Brown.
That is his first lady, I believe, who is speaking right now. He's been in sworn in. We're going to come back in a moment and listen to him speak.
(COMMERCIAL BREAK)
VELSHI: And this is Governor Jerry Brown, the chief justice of the California court on the right. That is Jerry Brown's wife in the middle.
She's about to be the first lady. I called her "the first lady." She's not yet, but she will be in a few moments.
There's Jerry Brown on the left. Let's listen in.
UNIDENTIFIED FEMALE: And raise your right hand and repeat after me. "I" -- state your name --
GOV. JERRY BROWN (D), CALIFORNIA: I, Jerry Brown --
UNIDENTIFIED FEMALE: -- "do solemnly swear" --
BROWN: -- do solemnly swear --
UNIDENTIFIED FEMALE: -- "that I will support and defend" --
BROWN: -- that I will support and defend --
UNIDENTIFIED FEMALE: -- "the Constitution of the United States" --
BROWN: -- the Constitution of the United States --
UNIDENTIFIED FEMALE: -- "and the Constitution of the state of California" --
BROWN: -- and the Constitution of the state of California --
UNIDENTIFIED FEMALE: -- "against all enemies" --
BROWN: -- against all enemies --
UNIDENTIFIED FEMALE: -- "foreign and domestic" --
BROWN: -- foreign and domestic --
UNIDENTIFIED FEMALE: -- "that I will bear" --
BROWN: -- that I will bear --
UNIDENTIFIED FEMALE: -- "true faith and allegiance" --
BROWN: -- true faith and allegiance --
UNIDENTIFIED FEMALE: -- "to the Constitution of the United States" -- .
BROWN: -- to the Constitution of the United States --
UNIDENTIFIED FEMALE: -- "and the Constitution of the state of California" --
BROWN: -- and the Constitution of the state of California --
UNIDENTIFIED FEMALE: -- "that I take this obligation freely" --
BROWN: -- that I take this obligation freely --
UNIDENTIFIED FEMALE: -- "without any mental reservation" --
BROWN: -- without any mental reservation --
UNIDENTIFIED FEMALE: -- "or" --
BROWN: Really, no mental reservation.
(LAUGHTER)
(APPLAUSE)
UNIDENTIFIED FEMALE: Good. "Or purpose of evasion" --
BROWN: -- or purpose of evasion -- UNIDENTIFIED FEMALE: -- "and that I will well and faithfully" --
UNIDENTIFIED FEMALE: -- that I will well and faithfully" --
UNIDENTIFIED FEMALE: -- "discharge the duties" --
BROWN: -- discharge the duties --
UNIDENTIFIED FEMALE: -- "upon which I am about to enter."
BROWN: -- upon which I'm about to enter.
UNIDENTIFIED FEMALE: Congratulations.
BROWN: Thank you very much. Thank you. I need a glass of water here.
(APPLAUSE)
Thank you. Thank you.
This is the first time I did one of these inaugurations with my hand on a bible. And it's Anne's grandfather's bible, so we used it for the wedding, we used it for the inauguration. I think it's going to stick.
Madam Chief Justice, Governor and Mrs. Davis, Governor and Mrs. Schwarzenegger, esteemed members of the Senate and the Assembly, constitutional officers, distinguished guests, fellow Californians, thank you for joining me today.
And Governor Schwarzenegger, thank you also for your courtesies and help in the transition and for your tireless efforts to keep California the great exception that it is.
(APPLAUSE)
This is a special moment, as executive power passes from one governor to another, determined solely by a majority vote. It's a sacred and special ritual that affirms that the people are in charge and that elected officials are given only a limited time in which to perform their appointed tasks.
For me, this day is also special because I get to follow in my father's footsteps once again. In 36 years --
(APPLAUSE)
In 36 years after my first inauguration as governor, even following my own. Then 1975, it was the ending of the Vietnam War and a recession caused by the Middle East oil embargo.
Now, as we gather in this restored memorial auditorium dedicated to those who died in World War I, it's our soldiers fighting in Iraq, in Afghanistan, and our economy caught in the undertow of a deep and prolonged recession. With so many people out of work and so many families losing their homes to foreclosure, it's not surprising that voters tell us they're worried and believe that California is on the wrong track.
Yet, in the face of huge budget deficits year after year, and the worst credit rating among the 50 states, our two political parties can't come close to agreeing on what the right path forward is. They remain in their respective comfort zones, rehearsing and rehashing old political positions.
Perhaps that's the reason why the public holds the state government in such low esteem. And that's a profound problem not just for those of us who are elected, but for our whole system of self government. Without the trust of the people, politics degenerates into mere spectacle, and democracy declines, leaving demagoguery and cynicism to fill the void.
The year ahead will demand courage and sacrifice. The budget I propose will assume that each of us who are elected to do the people's business will rise above ideology and partisan interests and find what's required for the good of California.
(APPLAUSE)
There is no other way forward. In this crisis, we simply have to learn to work together as Californians first, members of a political party second.
(APPLAUSE)
In seeking the office of governor, I said I'd be guided by three principles.
First, speak the truth. No more smoke and mirrors on the budget. No empty promises.
(APPLAUSE)
Second, no new taxes unless the people vote for them.
And third, return as much as possible decisions and authority to cities and counties and schools closer to the people.
(APPLAUSE)
With your help, that's exactly what I intend to do. The budget I present next week will be painful, but it will be an honest budget.
The items of spending will be matched with available tax revenues. And specific proposals will be offered to realign key functions that are currently spread between state and local government in ways that are complex, confusing and inefficient.
My goal is to achieve greater accountability and reduce the historic shifting responsibility back and forth from one level of government to another. The plan represents my best understanding of our real dilemmas and possibilities. It's a tough budget for tough times.
When dealing with a budget gap in the tens of billions, I must point out that it's far more than waste and inefficiency that we have to take out. Yes, government wastes money, and I'll be doing a lot about that starting this week. But government also pays for things that most people want and that are approved only after elected representatives debate their merits and finally vote them into law.
They cover the spectrum from universities, parks, health care, prisons, income assistance, tax incentives, environmental protection, firefighting and much else. But choices have to be made and difficult decisions taken.
At this stage in my life, I have not come here to embrace delay and denial.
(APPLAUSE)
In reflecting on our difficulties, my thoughts turned to those who preceded me and what they faced and what they were able to accomplish -- my father, who took the oath of office as governor 52 years ago, his mother, Ida, born on a ranch in Colusa County in 1878, and her father, August Shuckman (ph), leaving Missouri in 1852 and traveling across the plains to Sacramento.
I tried to imagine the difficulties my great-grandfather confronted as he left Germany and came to America, and then across the plains and over the Sierras into California. Let me read from the diary that he kept during his long trek westward.
"On the 26th of June, we came to the first sand desert. It was 41 miles. We went there at night and rode 19 hours in it."
"On the 26th of July, we came to the second large plain, also 40 miles long. Here, we lost seven oxen which died of thirst. Thousands of cows, horses and mules were lying about dead."
"The discarded wagons by the hundreds were driven together and burned. We saw wagons standing that would never be taken out again, and more than a thousand guns that had been broken up. Here, on this 40 miles, are treasures that can never be taken out again."
We can only imagine what it took for August Shuckman (ph) to leave his family and home and travel across the ocean to America, and then across the country, often through dangerous and hostile territory in a wagon train. But came he did, overcoming every single obstacle. Yet, he wasn't finished.
After a few years, he went back to his homeland and found a wife, Augusta (ph), and brought her with him, sailing around the horn and up the coast of South America, back to California. Their granddaughter, my aunt Connie Carlson (ph), is here with us this morning. This March she will be 99.
Aunt Connie (ph), would you stand up, let everybody see you? Sure, stand up. Can we get a light on here? Turn around and see. (APPLAUSE)
By the way, those who are hankering after my job, it may be a while, so relax. God willing, the genes are good. I won't say anymore.
We can only imagine what it took for August Shuckman (ph) to leave his family. No. That's what you get when you ad-lib.
All right. But here's the point -- it's not just my family, but every Californian is heir to some form of powerful tradition, some history of overcoming challenges much more daunting than the ones we face today. From the need of peoples who survived the total transformation in their way of life, to the most recent arrival, stories of courage abound and it's not over.
The people of California have not lost their pioneering spirit or their capacity to meet life's challenges. Even in the midst of this recession, Californians, this year, will produce almost $2 trillion of new wealth as measured by our state's domestic product.
(APPLAUSE)
BROWN: The innovations of Silicon Valley, the original thinking coming out of our colleges and universities, the skill of our farmers, the creative imagination of Hollywood, the Internet and the grit and determination of small businesses everywhere all give hope to an even more abundant future up ahead.
(APPLAUSE)
BROWN: And so to our teachers, our nurses, our firefighters, our police and correctional officers, our engineers and all manner of public servants who faithfully carry out our common undertakings, this is a time to honestly assess our financial condition and to make the tough choices. And as we do --
VELSHI: OK, we are going to continue to monitor the initial speech of Jerry Brown as governor. It's not his initial. He's been governor twice before, but he is being sworn in now for the third term as the governor of California. That's live in Sacramento. We'll keep listening in to it.
The thing you have to remember is what Casey Wian told us. He has talked about the budget he is going to bring in and that it's going to be painful, that expenditures are going to be matched to revenue that's coming in. More from Jerry Brown and how he's going to govern California, a truly troubled place right now. We'll continue to follow this and discuss it later.
But right now, we're going to take a quick break. When we come back, I'm going to tell you about America's credit limit and what's about to happen to it.
(COMMERCIAL BREAK) VELSHI: Here's a story that you're going to hear a lot about in the coming days, so I want to give you an explanation of it first. Have you ever had the balance on your credit card run real high up to your credit limit? That's happening to America right now, and America needs a credit limit increase. Or at least, that's what the White House says.
Where does the United States of America go for a credit increase? Well, unlike us, where we go to the bank, the United States of America goes to itself. Congress sets the nation's credit limit, or what is called the debt ceiling. That's the word you'll hear in the next few days. It needs to raise the debt ceiling soon. Some Republicans, though, are saying they won't support that move. They are digging in about stopping what they call out-of-control spending.
So, what happens if those Republicans have their way? What happens if Congress does not vote to increase the debt ceiling? Well, Austan Goolsbee, the chairman of the Council for Economic Advisers, said yesterday that the impact on the economy would be catastrophic. He says that Republicans are playing chicken with the debt ceiling. And he says if they do not approve the increase for the debt ceiling, it could be a worse financial economic crisis than anything we saw in 2008. Why? Because America would sort of go into default.
The debt ceiling right now, the credit limit -- think about it that way. Use those terms interchangeably. The credit limit for America is $14.3 trillion. The current national debt is $13.9 trillion. Almost up there. And given the rate at which we are spending and not taking in money, we're going to hit that $14.3 billion -- trillion dollars very soon.
Let me give you some sense of debts and deficits. This is, by the way, the same thing for government as it is for you. You have two things. You've got income. And you have expenses, right? And in everybody's life, we would like the income to be greater than the expenses. But if you subtract your expenses from your income, you either have a surplus, which you can spend on whatever you'd like or save or invest. Or you have a deficit, a shortfall. OK? We all know that those are the two things that you can have.
Guess what we have? Guess what we've had in the United States for a long time? A deficit. Now, when you add deficit on top of deficit on top of deficit, what you end up with is -- that's your national debt. So, that $13.9 trillion right now is your national debt.
And that's the problem. Because if you have that much national debt, you have to have less than your debt ceiling. The debt ceiling right now is $14.3 trillion. But we know that that $13.9 trillion is going to get bigger. And that's why we have to have that credit limit increase.
So, you're going to hear a lot of talk about that over the course of the next few days. And hat's why I wanted to give you this little primer on it. We'll of course, stay on top of it. Now with millions cut from California's education budget -- you just saw Jerry Brown being sworn in. With millions cut from California's education budget and thousands of teachers getting laid off, what is the newly sworn in governor's big plan to rescue that state's schools? We're going to talk about that after the break.
(COMMERCIAL BREAK)
VELSHI: OK. Governor Jerry Brown, big swearing-in. We just saw him getting sworn in in California. He has got a lot on his plate as the new governor there. The state's budget problems are top of his list. He was just talking about that.
But he's also got education problems. What is his plan to fix the schools in California? You know, we talk about education here all the time, public education. California is a big problem.
Here's a taste of just some of the issues affecting California classrooms. Number one 1, $17 million in cuts from public school budgets during the past two years. 21,000 teachers laid off because of those budget cuts. Some of the lowest test scores in the entire country and crowded classrooms. And get this, one out of four students in California in the public school system are not proficient in English.
I want to bring in Howard Blume. He's a staff writer at "The Los Angeles Times," a newspaper that has been very, very interested in the education crisis in California.
Howard, for the rest of Americans who don't follow California's public education crisis -- and I call it a crisis -- as closely as you do, have we outlined the largest problems there?
HOWARD BLUME, STAFF WRITER, "THE LOS ANGELES TIMES": You outlined many of them. One thing is you said $17 million. Actually, the figure is $17 billion.
VELSHI: Wow. $17 billion. OK. My mistake. Thank you.
BLUME: $17 billion, right. There are all sorts of problems. I mean, the college tuition is rising through the roof. The population of students is becoming increasingly low-income with lower parent education levels. It's in some ways a perfect storm.
VELSHI: Then that's a good question because, look, we know all across the United States, there are many, many states -- in fact, there are a handful of states that aren't suffering an education crisis in the public system. What made California's worse?
BLUME: Well, some of it goes all the way back to 1979. And at that point, California schools were among the best funded in the nation. And state voters, because they were dealing with another issue -- skyrocketing property taxes -- passed Prop 13, and that slashed property taxes. In the minds of some, the California schools have been in a downhill slide ever since. I mean, that's only part of the issue. We've had an increasingly immigrant population, increasingly lower education levels for the parents, costs have gone up. And also this boom and bust cycle in the economy. So in good years, money is pumped into the education, and then the bust happens and you have to slash those programs. That's obviously no way to run an effective system.
VELSHI: Now, Jerry Brown in his many jobs, including as mayor of Oakland has made some attention to education. In fact, he founded a couple of charter schools while he was there. During his gubernatorial race, he did outline a plan to fix the education system. What is that plan, and is it likely to work?
BLUME: Well, one impediment to any plan is money of course. One thing I didn't mention is that federal stimulus funds, which hugely went to education, they've essentially run out. So, in addition to everything else and all the cuts you described previously, those were in a climate of receiving federal stimulus funds that are about to go away.
But to answer your question, Jerry Brown's plan includes doing more with online learning. That's very cost effective. Doing more at the community college level, which touches the more -- the immigrant population, the students who may not have the credentials. He wants to reform the way teachers are recruited and trained. He wants to redo the state's testing system so that it matches more with the real world in terms of career and college readiness.
Some of those goals don't actually cost money. They require using the money that you have in a smarter way. Some of those goals actually do require more money.
VELSHI: OK. We will keep on top of it with you. We know you folks at The L.A. Times take this all very seriously, and we appreciate the hard work that you do covering education. Howard Blue, thanks for being with us. Howard Blume is a reporter with "The Los Angeles Times."
Well, a man who worked with President Reagan, President Herbert Walker Bush and President George W. Bush found dead and dumped in a landfill. I'll give you the latest on that mystery right after this break.
(COMMERCIAL BREAK)
VELSHI: Updating developments in our top stories. Police in Newark, Delaware, say a former White House aide has been found dead in a landfill. They identified him as John Parsons Wheeler, the Vietnam vet who was instrumental in raising money for the Vietnam Veterans Memorial. Wheeler served in various capacities in the Reagan administrations and both Bush administrations. We'll keep you updated with new information as we get it.
In money news, one of the president's top economic advisers 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 government should hit that pretty soon. If Congress doesn't raise it, the U.S. could default for the first time in history.
Facebook has received investments from Goldman Sachs and an unnamed Russian investor that placed the social network's value at $50 billion according to "The New York Times." That makes it worth more than time media giants like Time Warner, the parent of CNN, eBay and Yahoo! Investment could ad pressure to the company lead by "TIME" Person of the Year Mark Zuckerberg to go public.
And a powerful partnership could move an experimental blood test for cancer closer to reality. Johnson & Johnson is teaming up 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. It's likely still many years away from being widely used.
And the revolving door of celebrity rehab. We'll tell you who's coming out and who's going in -- right after this break.
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VELSHI: Entertainment news now.
Actor Pete Postlethwaite has died. He may be best known to many of for the roles in the second "Jurassic Park" movie and the third "Alien" film. He was nominated for an Oscar just once for "In the Name of the Father."
(BEGIN VIDEO CLIPS)
VOICE: Increased police powers of search and arrest.
UNIDENTIFIED MALE: Go, go, go!
UNIDENTIFIED MLAE: I have a right to speak to my son.
UNIDENTIFIED MALE: You are in trouble, (INAUDIBLE).
UNIDENTIFIED MALE: The murders of five people.
UNIDENTIFIED MALE: Who taught you how to make the bomb?
UNIDENTIFIED MALE: What are you doing in here?
UNIDENTIFIED MALE: Conspiracy to murder.
UNIDENTIFIED MALE: My name is Giuseppe Conlon. I'm an innocent man.
(END VIDEO CLIPS)
VELSHI: Here are some notable films you may have seen him in. Last year's hit, "Inception" with Leonardo DiCaprio. He also appeared with Leo in 1996's "Romeo + Juliet." He was also the Oscar winning -- he was in the Oscar winning best film "The Usual Suspects." He starred opposite Daniel Day-Lewis in the film, "In the Name of the Father." That's what we just showed you. And again, in "The Last of the Mohicans." Pete Postlethwaite was 64 years old.
Listen to this one. Legendary rock and roller Chuck Berry back home and doing fine, according to his agents. Check out this YouTube video of his New Year's Day show in Chicago. Eighty-four-year-old entertainer who had to be helped offstage when he became erratic during his show. His agents say it was exhaustion.
He's actually played two shows the night before in New York City. He's 84 years old. If you're wondering, he still plays around 30 shows a year, next one scheduled for January 19th in St. Louis where he lives. No indication that he's planning on skipping that gig. Hope he gets better soon.
OK. One going in and another one coming out. We're talking, of course, of celebrities in rehab. Lindsay Lohan set to leave the Betty Ford Clinic tomorrow. At least that's what her dad said. She began the court-ordered substance abuse rehab three months ago. The judge decided she had to stay until at least today in order for her to miss all of New Year's Eve parties.
And if she violates her probation again, she won't go back to rehab. It will be six months behind bars.
So, who's taking her place as a rehab patient? How about actor David Arquette? He waited until after the New Year's parties to check himself in. His wife Courtney Cox tells "People" magazine that says she's proud of him for dealing with his alcohol and depression issues. Cox and Arquette separated in October. She said he's had a hard time handling the situation.
Well, time now for a CNN political update and more on the brewing fight over health care in the new Congress.
CNN chief national correspondent John King joins me live now from the CNN political desk in Washington.
Hey, John.
JOHN KING, CNN CHIEF NATIONAL CORRESPONDENT: Ali, the new Congress doesn't come back until Wednesday officially, but health care will be one of the top Republican priorities in the House, repealing the Obama health care legislation.
The Democrats are trying to bait them into a big policy fight here. Senate Democrats sending over to the new House Speaker John Boehner a letter saying, "You know, if you repeal the Obama health care plan that we Democrats passed last year, what about all the seniors in the so-called donut hole range that got prescription drug benefits assistance in that bill?"
The donut hole, prescription drugs, that's the issue today, Ali. Watch how this one will play out over the next several weeks as Democrats cite a lot of politically popular parts of the health care bill as they try to engage in a big policy fight. This will be the first big battle with the new Republican Congress in the House.
Number two, a number of new governors taking office in recent days. You just showed Jerry Brown out there in California taking it. California, Nevada, Minnesota, Wisconsin holding inauguration ceremonies today. And obviously, budget crises are the challenges facing all these new governors. You heard Governor Brown just a few moments ago saying, painful, honest choices must be made in the days ahead there.
And on the weekend talk shows and all around Washington, even though it's just early 2011, Ali, a lot of talk about 2012 and who will run in the Republican -- for the Republican nomination. And if she runs, can Sarah Palin, the former governor of Alaska -- can she win the nomination? Can she win the presidency?
The noted long time conservative columnist George Will saying on ABC yesterday, no way, he sees no way Sarah Palin could win the election. Other conservatives, though, say, "Let's see. If she runs on fiscal issues, maybe she's got a chance."
VELSHI: We'll be keeping a close eye on it, as will you, every week night, 7:00 p.m. on "JOHN KING, USA." John, always a pleasure to see you.
Your next update from "The Best Political Team on Television" just an hour away.
And coming up next: my first "XYZ" of the New Year chockfull of my predictions for your money in 2011.
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VELSHI: Time now for the "XYZ" of it.
In my other job as CNN's chief business correspondent, I've been asked a lot lately what 2011 is going to look like economically.
Let me give you my sense of it and I'll start by talking about GDP growth, gross domestic product. It is the biggest measure of economic growth -- think of it as the sum total value of all the goods and services produced by a country. When you talk about a growing economy, you talk about how much bigger its GDP is than it was the previous year.
Now, according to a company whose forecasts I trust, IHS Global Insight, the U.S. economy will grow by 3.2 percent in 2011. Where does that put us on the map? It puts us way behind China which will grow by 9.2 percent, India at 8.1 percent, Brazil at 4.1 percent.
Now, all of this is to say that January 3rd, today, is a great day to rebalance your portfolio, selling some stocks that have gained and buying some that are set to gain. The stock market enjoyed strong gains in 2010 following a very strong 2009. Now, experts expect that to continue as consumers continue to pay down their debt and start spending again. Now, make sure you include the rest of the world in your investments or at least U.S. companies that generate much of their profit in fast-growing companies.
On Friday, we'll get the jobs report for December. Expect to see jobs created and unemployment rate down a bit, something I think we'll see more of in 2011. Not as much as we like, but jobs are being created and this is the time to retrain into fast growth areas like energy, transportation, health care and certain parts of finance and education.
Now, what about your home prices and oil? Well, tune in tomorrow for my predictions on that.
For now, I predict Brooke Baldwin will take it from here -- Brooke.
