Return to Transcripts main page

CNN Newsroom

Budget Battle Begins; Dramatic End to Crime Spree; Egypt's Ripple Effects

Aired February 14, 2011 - 15:00   ET

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

RANDI KAYE, CNN ANCHOR: Good afternoon. I'm Randi Kaye, in for Brooke Baldwin.

A developing story out of Texas at this hour. A parking garage under construction has collapsed. Take a look at this video. Two workers have been rushed to the hospital. It happened about a couple of hours ago, firefighters telling our affiliates in San Antonio that seven levels of unfinished structure fell. The weight of that is about 1,500 tons. Again, two workers rushed to the hospital. We will, of course, keep an eye on this as we monitor some other news as well.

The president's new budget would begin to shrink the deficit, but we have just heard from congressional Republicans and they're saying Mr. Obama isn't even getting close to what needs to be done. Take a listen to this.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN (R), WISCONSIN: And so what did we just get today? We got a punt. The president punted on the budget, and he punted on the deficit and on the debt. That's not leadership. That's an abdication of leadership.

(END VIDEO CLIP)

KAYE: So let me lay this out for you. This year the federal deficit is running at $1.65 trillion. The budget the president just sent to Congress would trim deficit spending down to $1.1 trillion. A big reason the deficit shrinks, no new extension of the Bush tax cuts. Another reason? Spending cuts.

Take a look, cuts to the Pell Grant program, $8 billion, cuts to heat subsidies for the poor, cuts to housing and community development, and as you probably know already, the president is talking about a five-year freeze on most nonsecurity spending.

In a number of places, the budget actually goes up, but an overall boost in Pentagon spending is seen as a prelude to cuts down the road. As for education and energy, well, they're clearly among the president's top priorities. Here's Mr. Obama this morning.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: These investments are an essential part of the budget my administration is sending to Congress. Because I'm convinced that if we out-build and out-innovate and out-educate, as well as out-hustle the rest of the world, the jobs and industries of our time will take root here in the United States. Our people will prosper and our country will succeed.

(END VIDEO CLIP)

KAYE: So the president's proposing to start bringing the deficit down. But the Republicans are saying do it faster, much faster.

Lisa Desjardins on Capitol Hill.

Lisa, good to see you. What more can you tell U.S. about the reception there for the president's new budget?

LISA DESJARDINS, CNN RADIO: Randi, I guess it's a little bit like the weather this time of year. It ranges from lukewarm at best to a downright all-outright chill.

Democrats don't like some of these proposed cuts, including cuts to college scholarships and emergency heating money. The best I heard from Democrats was an e-mail I got just a few minutes ago from one of them saying that we will review this budget, nothing positive, nothing negative.

And, as you just played, Republicans are going on the attack.

KAYE: And let's show our viewers something that went up today on the White House Web site. This is the president's budget director, Jack Lew.

(BEGIN VIDEO CLIP)

JACK LEW, WHITE HOUSE BUDGET DIRECTOR: We obviously have a very deep problem facing us on the deficit. But we didn't always. You can see that as a government we were running a surplus not that many years ago. In fact, I was the director of the Office of Management and Budget until 2001. And I left, and we were running a surplus of $5.6 trillion.

We need to get from a place which is just unsustainable to a place where we can actually pay our bills and have a stable, secure future.

Like every family, we have to tighten our belts and live within our means, while we're investing in the things we need to have a strong and secure future. We need to do that on a bipartisan basis. There's no one side that has all the answers. We know that you have to stabilize where we're going before you can move on and solve the rest of the problem.

(END VIDEO CLIP)

KAYE: The word of the day, the word the White House seems to be pushing is stabilize, start to get things under control, don't do anything drastic. Lisa, what's the Republicans' approach? Very different, I'm sure.

DESJARDINS: It is.

Republicans say cut right now. In fact, that's the debate that we're going to have right here in Congress this week, in the House, Republicans proposing cuts for this current spending year. That's an important difference. What the president is proposing is cuts in the budget that starts in October.

Republicans say that's waiting too long and we want cuts now. Now, of course, we also have to say we don't know what Republicans want to do long term. We have yet to see a solution from Republicans for Medicare, Social Security, the big entitlement programs, though just a few minutes ago our Brianna Keilar e-mailed me that Paul Ryan told reporters that we do have to address entitlements, implying we may see a plan from them in coming days or coming months -- Randi.

KAYE: And, Lisa, is there any sense at this hour that the freshman House Republicans are going to scale back some of the budget cutting demands now they have actually been elected and have to govern?

DESJARDINS: Yes, those guys are so interesting to watch. I'm glad you brought them up.

It's actually the opposite, Randi. We have seen House freshman Republicans push their caucus, push their party to make more cuts than it was planning. Last week, House Republicans came out with one list of cuts, but their freshmen said, that's not good enough. We want more. They held their ground and in fact the Republicans had to regroup and they did propose more cuts.

So, so far, those House freshmen Republicans are being tough on the spending -- Randi.

KAYE: Lisa Desjardins -- thank you, Lisa.

And coming up in just a few minutes, the president's domestic policy adviser Melody Barnes joins us. I will ask her why the cuts in this budget aren't as deep as the debt commission actually recommended.

And Donald Trump will join me to weigh in. I have got to ask him about his tussle with Ron Paul while he's here. So stick around for the Donald as well.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: Get to the back of the train. Get to the back of the train.

(END VIDEO CLIP)

KAYE: A wild weekend crime spree ends dramatically on a subway train. I will talk with the man who stopped the knife-wielding suspect in his tracks.

But, next, Yemen, Iran, Algeria, what happened in Egypt may not stay in Egypt. Ben Wedeman has been covering the region for year. We will go to him live from Cairo next to put it all in context.

(COMMERCIAL BREAK)

KAYE: In a matter of weeks, the masses have toppled dictators and their decades-old repressive regimes, first Tunisia, then Egypt.

But what we are seeing is not just contained to a couple of nations. The uprisings in Tunisia and Egypt have evolved into a powerful and increasingly energized movement of the people, quickly gaining momentum across North Africa and the Middle East.

Protests are spreading to countries as far as Cameroon, the latest in Algeria, Yemen and Iran, the most tense scenes from Iran, where security forces clashed with thousands of demonstrators protesting the regime of President Mahmoud Ahmadinejad.

Across Egypt today, a wave of protests as thousands of workers demanded better pay and working conditions.

So let's go straight to Ben Wedeman, who joins us live now from Cairo.

Ben, the situation there still so uncertain with the military in power, the Parliament dissolved, the constitution suspended. What is the latest there today?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Randi, what we have seen today is really this wave of labor unrest across the country.

I was driving around Cairo today, and sort of everywhere I went, I saw workers on strike, some of them at theaters. I saw that there were hundreds of ambulances parked in front of one Health Ministry office where the ambulance drivers had gone on strike. Basically, after 30 years of just complete repression of any sort of labor movements and whatnot, people with grievances across the board, working conditions, low pay, bosses they feel who have been oppressive over the years, everyone is coming out to strike.

And the military rulers of Egypt don't seem to know how to deal with it. They're asking people not to do anything that would disrupt production in the country, disrupt the provision of basic services to Egyptians. But it seems that kind of the lid is off a pressure cooker and everybody who can do it is now on strike, except perhaps CNN journalists. And that may come soon at this rate.

KAYE: And with the military in charge of the country's affairs, it has the monumental task of not only restoring some sense of normalcy, but also addressing the issues, the economic and political issues that actually fueled the protests. So how do they plan to do this? WEDEMAN: Well, there's a bank holiday going on, so banks are closed. The stock market, which was supposed to reopen on Wednesday, is now closed until further notice.

I think they're really scrambling to find some sort of solution to all of these problems. They're also in discussions with the young revolutionaries who toppled the Mubarak regime, trying to work out some political formula whereby they would endorse the military and their effort to stabilize the situation. And, of course, the military has promised that there will be free and fair parliamentary and presidential elections. But they haven't as yet said when that will happen -- Randi.

KAYE: And we have seen governments across the Middle East trying to prevent this from happening in their country. They're busy making political concessions to ease instability. Is there a sense of urgency that this unrest is spreading as we watch Yemen, Iran, Algeria, and others?

WEDEMAN: Urgency is definitely the word, and in fact I heard somebody say today that for the first time in decades, governments are now afraid of the people, and not the other way around.

So, for instance, today, we saw in Algeria, after a series of protests there against the government, the government is saying that they will now lift the state of emergency that's been in place for decades. And we have seen, for instance, the king of Bahrain, where there have been lots of demonstrations today against the government, he has promised to give $2,600 in cash and food subsidies to every family in the country, obviously hoping that that would sort of let -- take the edge off of the protests there.

We have seen in Yemen the president there, Ali Abdullah Saleh, has said that he's promised he will not run for election again, and this a man who's been in power since 1979. And he also promised that his son would not run for office as well.

So, all across the Middle East, we find governments scrambling to try to lessen the edge of the protests. But, as we saw in Egypt, promises don't always work -- Randi.

KAYE: Ben Wedeman in Cairo for us -- Ben, thank you.

And back here at home, for more than 24 hours, a serial stabber was on the loose all over New York City. But one man commuting to work on a Saturday hadn't heard anything about it until he came face- to-face with the alleged killer. How was this hero inspired by mixed martial arts? We will talk to him next.

(COMMERCIAL BREAK)

KAYE: Welcome back.

A bizarre crime spree ends with a takedown on a subway car. Four people are dead. One man is being called a hero. And he has the wounds to prove it. And the man police say went on the rampage claims he was set up. I'm talk to the hero in just a minute, but first listen to what happened.

Police say this 28-hour frenzy of violence started early Friday morning in Brooklyn when Maksim Gelman got into a fight with his mother. She wouldn't let him borrow her Lexus, apparently. When his step father intervened, police say Gelman stabbed him 11 times. They say he then took the car, drove to his ex-girlfriend's house and killed her mother.

Well, when his ex showed up, investigators say he stabbed her to death, too. Gelman took off. And after he rear-ended another car, he allegedly stabbed that driver and took off in the wounded man's car. From there, police say Gelman hit and killed a pedestrian, abandoned the car and hopped into a cab, stabbing and wounding the cabbie.

Then he allegedly confronted a couple on the street, stabbed the man in the hands and took his car keys. Next stop? No, it wasn't over yet. The subway. Police had gotten a tip that Gelman was there. But before they could get to him, Gelman faced off against passenger Joseph Lozito. He told him -- quote -- "You're going to die."

But that is not what happened. Joseph Lozito joins me now by phone to talk about all of this.

Joseph, if you can, take us back to that moment on the subway when you noticed the suspect. Were you alert right away that something wasn't right?

JOSEPH LOZITO, SURVIVED ATTACK ON SUBWAY: He didn't look right, to be honest with you. He had a look about him that sometimes they describe it as that faraway look or the lights are on, but nobody's home type thing.

And he -- I had no idea what had transpired the previous 24 hours. I hadn't had an opportunity to see a New York newspaper yet, so I had no idea. But even without knowing that, I don't think it was just me. I think most of the passengers on the train, whether they recognized him or not, he just had a pretty shady look about him.

KAYE: So this guy lunged at you. How did you know how to take him down? What did you do?

LOZITO: Well, I mean, I -- it would be great if I could sit here and make up a story and tell you that I used this or I used that.

The reality is that when he lunged at me, I knew that it was one or two things -- one of two things was going to happen. He was either going to kill me or I was going to have to defend myself. And basically I didn't want to sit there and get any more injured than I was, so I took the opportunity. And I...

(CROSSTALK)

KAYE: You used some martial arts, didn't you?

LOZITO: Well, yes. I mean, I'm a big UFC fan, a big MMA fan, and I'm a big football fan. And I have never trained in martial arts or mixed martial arts, but I have been watching it for 20 years.

And I was just trying to grab him by the legs and grab him by the waist. I think honestly some of the local media is playing up the MMA aspect, that I have trained in it, a little too much. But, honestly, it's just from the years of watching it. I'm just a fan.

KAYE: Yes. But, still, this guy had a knife.

LOZITO: Yes.

KAYE: He threatened your life. He told you you're going to die.

LOZITO: Yes.

KAYE: What about your injuries? I know you have a few good ones.

LOZITO: Yes. He got me pretty good. I'm walking around with what looks like a couple of zippers in the back of my head.

And, you know, he got me very well. I mean, I don't know the total stitch count, but I have severe cuts to the back of my head and the side of my head that required both stitches on the inside and staples.

I have a black eye. And I honestly don't remember how that happened. He cut me on my left thumb deep enough where you could see the tendon. And the doctors told me that he cut me deep enough on my left tricep where you could see part of the muscle.

KAYE: You know, you really are -- I mean, I know I don't have to tell you this, but you're certainly lucky to be alive. Do you consider yourself the hero, as many have dubbed you?

LOZITO: No.

Well, I -- first off, I am very lucky to be alive. I am very fortunate. Everyone is calling me a hero. And I appreciate everyone's sentiment. I think it's great. But the real heroes are the New York Police Department, the EMTs. There was a gentleman that helped one of the police officers control this man to handcuff him.

And there was a gentleman on the train that stayed with me the whole time that applied pressure to one of my wounds to help the blood flow. So, I mean, you know, on the list of heroes, I'm way down at the bottom, if I even make the list. I'm not a hero. I just was trying to survive.

KAYE: Well, you're awfully modest, Joseph Lozito. I'm sure your kids and your family are very proud of you. Thanks so much for sharing your story with us.

LOZITO: Oh, my pleasure.

KAYE: Well, we already knew that she could ask for toast, but now Congresswoman Giffords is doing a whole lot more than that. Up next, her husband talks about it.

And then Donald Trump will be here to talk about President Obama's new budget. And, of course, I will get his reaction to what Ron Paul said about him this morning.

(BEGIN VIDEO CLIP)

REP. RON PAUL (R), TEXAS: I don't know whether he has earned the right to criticize somebody for not winning an election, when I don't know how many elections he's won so far himself.

(END VIDEO CLIP)

(COMMERCIAL BREAK)

KAYE: In Iran, security forces clashed with demonstrators protesting President Mahmoud Ahmadinejad's government. Tens of thousands of protesters marched down Revolution Avenue toward Freedom Tower in downtown Tehran today.

Witnesses say uniformed officers and plainclothes pro-government militia rushed crowds that were chanting, "Death to the dictator." The demonstrations come on the heels of huge protests and political upheaval in Egypt.

Prince William and Kate Middleton have chosen their wedding party. Prince Harry is set to be the best man, no surprise there of course. Kate's sister Philippa will be her maid of honor. The couple also named four bridesmaids and two page boys. All of them are under age 11.

Arizona Congresswoman Gabrielle Giffords is speaking. She's actually answering questions. She's holding her own in conversations apparently. That's what her astronaut husband, Mark Kelly, tells NBC News.

(BEGIN VIDEO CLIP)

MARK KELLY, HUSBAND OF CONGRESSWOMAN GABRIELLE GIFFORDS: The communication is getting better every single day. She -- you know, it was reported just a few days ago that she said a single word and what the word was, but since then, this has really accelerated.

So you can have I guess what would be relatively a normal conversation with her on some level.

(END VIDEO CLIP)

KAYE: Up next, the president's domestic policy adviser, Melody Barnes, will be here to talk about the president's budget proposal. And I will ask her why the cuts in this budget aren't as deep as the debt commission recommend.

Also, we have to take a quick break right here, but when we come back, Donald Trump is also going to be here to react to the president's budget proposal as well. So stick around. (COMMERCIAL BREAK)

KAYE: All right, we are waiting for Melody Barnes, the White House domestic policy advise, to get miked up. And once she does, we will speak with her. We also have Donald Trump sticking around. So, we're going to speak with him as well. So, Stay with us.

Meanwhile, a young woman jumps off a bridge 40 feet into a lake to save her own life. It's an incredible story of bravery.

Listen to what happened. Bianca Vera was in a car accident on a bridge north of Atlanta. She got out to check for some damage. Then she saw say tractor-trailer skidding on ice, can you imagine this, heading straight today her. So jumped right into the lake below from a height of about four stories. She says she did the only thing she could do.

(BEGIN VIDEO CLIP)

BIANCA VERA, SURVIVED JUMP: I just jumped. I remember being in the air, and I -- I heard the impact of the car hitting the -- my car.

KAYE: Oh, wow. So you knew you had made the right move. Did you realize how far you were falling? I mean, we're looking at video of the car. We see the freezing cold lake that you jumped into. Did you realize how far -- what, it was about four stories, I guess? And what did it feel like once you hit the water?

VERA: No, I absolutely did not have any time to think about how far I would be falling down. But, I mean, once I hit that water, it was just like I had the wind knocked out of me. I had to I guess quickly collect myself and swim back to the surface.

(END VIDEO CLIP)

KAYE: Amazing story. Bianca Vera eventually made it to shore by herself. She's now out of the hospital and recovering from a broken vertebrae and some bruises.

Up next, as we said, we are going to talk to Melody Barnes and Donald Trump about the budget deficit, about Ron Paul, about all kinds of stuff.

So, just keep it right here.

(COMMERCIAL BREAK)

KAYE: The U.S. it seems has a growing problem with Pakistan. This is just one of many anti-American protests held in Pakistan since an American contractor was arrested there last month and accused of murder. Tensions between the two countries have become so frayed the "New York Times" is reporting that the U.S. State Department has actually postponed high-level meetings with Pakistan and Afghanistan.

CNN's Barbara Starr is following this story for us today. Barbara, is the arrest of Raymond Davies keeping the U.S. away from talks with Pakistan?

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, in fact, the administration announced this publicly now, Randi, that indeed the U.S. has canceled trilateral talks it had planned with both Pakistan and Afghanistan for next week. They are not going to meet, and all of this is really because of the man you see here.

This is the American contractor, Raymond Davis, who has been in custody by Pakistani authorities since last month when he was arrested, said to have been responsible for killing two Pakistani motorcyclists that he says he thought were coming after him to rob him. He was armed.

Now, the question is, does Mr. Davies, who works for the American embassy in Pakistan have diplomatic immunity? The U.S. insists that he does. And they say that's why he should be sent back to the U.S., and that is really at the crux of all of this. If someone has diplomatic immunity, even if they commit a crime, they are supposed to be in almost every circumstance sent back to their home country.

KAYE: That is a big question. But there have also been a lot of protests in Pakistan where they claim Davies is a military contractor but also maybe a spy, maybe not a diplomat. So what do we know about Raymond Davies and what he was doing in Pakistan?

STARR: Here's what we officially know. According to U.S. government officials, he was attached to the U.S. embassy contingent in Pakistan, and it is said that he was a "technical and administrative official," that he was a contractor for a company named Hyperion. That is what is publicly known about him.

The U.S. government is being very close-mouthed about all of this, saying no more than those barebones details. What they're sticking with is that he has diplomatic immunity. So far the Pakistani government says no. What this really has come down to is a test of wills between the two governments perhaps.

In Pakistan you see those demonstrations. Pakistanis are very sensitive to the presence of any U.S. officials in their country, especially those who carry a weapon. That's putting the government there in a box, the U.S. in a box. Everybody on this side in Washington sticking to that point, that this man has diplomatic immunity and regardless of who he works for, under that, he should be sent back to the U.S.

KAYE: And as both sides dig in and stand firm, what's really at stake here?

STARR: Well, there's -- you know, there is the -- let's be clear, the humanitarian case of this man and his legal situation inside Pakistan and whether diplomatic immunity has any teeth behind it.

More broadly, of course, it's another wrinkle in this very difficult situation that the U.S. finds itself with Pakistan, a vital security ally in the fight against terrorism, in the fight against Al Qaeda, very much, though, a question of how much the government in Pakistan really has the authority to step up and make certain decisions in the face of all these protests against this American man on the streets in Pakistan. The government there apparently holding to its position and apparently holding this man in continued custody.

KAYE: All right, thank you, Barbara Starr.

The president's new budget would shrink the federal deficit as we told you earlier today. He sent the package to Congress this morning. It would trim deficit spending to $1.1 trillion. It's currently running at more than $1.6 trillion.

Joining me from the White House now, Melody Barnes, Mr. Obama's domestic policy adviser. Melody, let's listen to Republican Paul Ryan speaking just a short time ago, then we'll talk about this.

(BEGIN VIDEO CLIP)

REP. PAUL RYAN, (R-WI) HOUSE BUDGET COMMITTEE CHAIRMAN: This budget is a punting budget. This budget doesn't address the drivers of our debt. Instead it makes it worse by doing nothing. Calls for more spending which they call investments, and a lot of taxes. Look, $1.6 in new taxes, $8.7 trillion in new spending, $13 trillion added to the debt, and we're going to spend $46 trillion over the next ten years? This is not an austere budget.

(END VIDEO CLIP)

STARR: Melody, Paul Ryan has said you can't tax and spend your way to prosperity. So what is your reaction to this?

MELODY BARNES, WHITE HOUSE DOMESTIC POLICY ADVISER: Well, first of all this is it a tough budget. And the president did several different things in this budget. One, he's saying we've got to cut some things. Either things that aren't working, we certainly have to get those off of our plate.

But even programs that we like and we otherwise wouldn't touch, we've got to cut some of those programs, too. So he started with the five-year non-security discretionary freeze. He's also added another $78 billion worth of savings from the Defense Department on top of that. That's an area in the past that people wouldn't have touched with a ten-foot pole, a 100-foot pole.

And he said to the federal work force, you've got to tighten your belts, too. He's put a freeze on the federal civilian work force on top of that.

We've also added additional cuts to Medicare to pay for some things that we used to pay for, and we're doing all of that in a way that if you follow the president's budget by the middle of this decade, we will be out of deficit spending.

But on top of that, he said, look, there are areas like Social Security, that's not an immediate short-term deficit issue. But for the faith of our work force and our young people in the future, we've got to make sure that program is there for them. So I'm going to work with Republicans to get that done, too.

KAYE: But wouldn't you save a lot more money going after the entitlements? Granted, you'd have to raise the retirement age and increase the amount of tax and change the payroll whole thing. But the critics are saying the president is just dealing with the small stuff. If you're not doing it now, when is the president going to make his first move on this and will he?

BARNES: Well, the president said it during the state of the union. He said there's a piece of the budget about 10 percent, 12 percent of the budget. It's important we rein things in and make cuts there. That's what's in this budget. But he's also said we've got to address the entitlement issues.

KAYE: But when is he going to?

BARNES: He said that before, others have. Owe appointed the fiscal commission and asked for their views across an ideological perspective. This budget adopts a lot of what that commission says.

But we know that you don't make progress, take steps ahead when you put out some big flashy proposal and throw it on the table and ask others to respond. Instead, what you do, and the president did this last December working with Republicans, is you say, let's come together, negotiate and let's talk about what we have to do on Medicaid and Medicare and Social Security to move forward.

KAYE: But the debt commission actually recommended cutting $4 trillion and this budget is a cut of about $1.1 trillion. So was the debt commission a waste of time and money?

BARNES: No. The president wouldn't have appointed the fiscal commission if he thought it were a waste of time and money. As I said, we've adopted many of the things that they put in their proposal and we've also said, you're right, we have to address these issues.

Look, we walked into the White House with a huge deficit, a deficit the last administration didn't have. In fact, they had a surplus. We got the budget. The economy stabilized again. But at the same time we've got to make investments if we're going to grow our economy.

And I think the difference between what's been talked about in the past and what we've put on the table is that these are investments that actually bring us returns in areas like education and areas like innovation and infrastructure, and we've got to deal with the deficit. As I said --

KAYE: Let's listen to one more Republican, Senator Jeff Sessions of Alabama. Then we'll get your reaction to what he says as well.

BARNES: Sure.

(BEGIN VIDEO CLIP)

SEN. JEFF SESSIONS, (R) ALABAMA: Now we are faced with taking on something as complex as entitlements that's deeply emotional as entitlements and the president of the United States is not even in the game, doesn't even suggest it has to be done? I mean, this is a -- you know, my wife says to me when I complain, don't blame me, you asked for the job.

(END VIDEO CLIP)

KAYE: Now, the Republicans are saying the country faces a crisis and that the White House is responding with baby steps. Does the White House consider the deficit a crisis?

BARNES: The president said it during the state of the union. He said it when he sent this budget up today when he made that announcement in Maryland standing next to the OMB director Jack Lew and the secretary of education Arne Duncan.

These are serious difficulties that sit in front of this nation, and we have to work together, Republicans and Democrats, to address them together. He said from the beginning let's take on the issue of Social Security reform, let's talk about Medicaid and Medicare.

He's put budgets on the table, on the books. Now he wants to work with Congress to go the rest of the way and get it done. He said this is the beginning of the conversation, not the end. We're prepared to move forward.

KAYE: All right, Melody Barnes, White House domestic policy adviser, we'll have to leave it there. Thank you for your time.

BARNES: Great. Thanks so much, Randi.

KAYE: And when we come back, Donald Trump will be here to react to the president's budget proposal, so stick around.

(COMMERCIAL BREAK)

KAYE: Does this guy look familiar? Donald Trump made a big splash at the CPAC convention. But then again the Donald could make waves in a puddle, couldn't he? Donald Trump with us by phone. Mr. Trump, so glad you could join us this afternoon. Respond to this first, if you would. Listen to this piece of tape, and then we'll chat about it.

(BEGIN VIDEO CLIP)

REP. RON PAUL, (R) TEXAS: I don't know whether he has earned the right to criticize someone for not winning an election when I don't know how many elections he's won so far himself.

(END VIDEO CLIP)

KAYE: Mr. Trump that was Ron Paul talking about you. So who is the more electable presidential candidate, you or Ron Paul?

DONALD TRUMP, REAL ESTATE MAGNATE, (via telephone): Well, I've never run in an election, but I have employed thousands and thousands of people. I've made billions of dollars, which if I ever decided to run, which is a possibility, frankly, I would make lots of money for the American people.

You know, it's one of those things I was making a speech, I was getting these tremendous applause because I was talking about China ripping us of and OPEC ripping us of and lots of other people. Everyone likes to rip off the United States because we don't have leadership that sees that.

This guy kept heckling me, vote for Ron Paul for president. And I never mentioned Ron Paul's name, but then I did say, he's unelectable. He is unelectable. I think he's a great guy, nice guy. I like him a lot. I agree with some of his views. I'm more conservative than he is probably, but I agree with some of his views.

But this was a response -- my response, which I guess was carried all over the world, unfortunately for him, but my response was just that, you know, he has zero chance of being elected.

KAYE: Well, you say that if you run and win -- obviously you think you're electable, so you also say that you would return respect to the U.S. where is the U.S. not respected and how would you return respect?

TRUMP: The United States is not respected. We're not respected for our smarts. We're not respected for virtually anything anymore. I mean, those days are gone. You look at what's happening in China. We're rebuilding China with our money, with all the jobs that we're producing. The jobs that we're producing are being produced in China.

We have an effective rate of unemployment of probably 19 percent, and it could be higher than that. You know, they say nine percent, but it's not nine percent. It's much closer to 20 percent. You look at China, they're up 36 percent from last year. They're going through the roof.

And what they're doing is they're making all of our products. We don't make products anymore. You look at what's happening with OPEC, how they're ripping us off with the oil prices. These 12 guys sit around the table and set the price of oil. We're going to be at $100 a barrel soon. Then we'll be at $150 and E200. We have nobody to protect us and say, fellows, you better not do it.

So, again, I like Ron Paul, and he's right. I've never been elected because I've never run in an election. Maybe I wouldn't do well and maybe I would. But I can tell you one thing, if I ever did get elected, this country would be respected again.

KAYE: Let's talk about the deficit. As it's structured, 66 percent of this thing is locked in, either interest on the debt or mandatory benefits such as Medicare, so spending cuts can actually only come from about one-third of the federal deficit. And a big part of that is the military. So how would Donald Trump shrink the federal deficit?

TRUMP: For one thing, I'm a big fan of the military. I'm a hawkish person because I see what's going on in the world. And I see these deals with Russia where they're telling us what to make. This is it the first time in the history of the nation where another nation is telling us how many missiles we can have and nuclear and other things that other countries are trying to develop hand over fist.

KAYE: So do you have an idea?

TRUMP: Yes. I think tremendous amounts -- and I've never heard it said - but I think hundreds of billions of dollars of money -- let's call it tax money -- could come from other countries when we stop them from ripping us off or, as an example, we're protecting South Korea from North Korea. Why aren't they paying for it? South Korea makes a fortune. If they were a company, their stock would be very high. And they make a fortune because of us.

Why are we protecting them? When bombs were thrown at them a month ago by North Korea, we sent the George Washington aircraft carrier, one of the great ships of the world, and a fleet of destroyers over to North Korea. Why aren't they paying for this protection? I don't mind protecting them, but pay for the protection.

So when you look at a hundred other items just like this, hundreds of billions of dollars could come in. So you wouldn't have to play around with Medicaid and Medicare and things that really are dear to people's hearts.

KAYE: Listen, I know you're an excellent businessman, so if you kind of just stick around with us for just two minutes. We're going to take a quick break, and then I want to talk to you about how you would run the government. So we'll be right back.

(COMMERCIAL BREAK)

KAYE: Welcome back, everyone. It's ten minutes before the hour. We are on the phone with Donald Trump, talking politics, talking a possible presidential run. We're looking at video of you, Mr. Trump, from CPAC over the weekend.

I want to ask you, if you do run, do you subscribe to the notion that the government can and should be run like a business?

TRUMP: Well, it certainly should, but a business with heart, because I'm a big believer in heart. People -- some people have real problems, and they should be helped, and I love helping people. But it should be done responsibly, and we should run the country responsibly.

I will tell you that, you know, you asked me before what would be the first thing I'd do. One of the very early things I would do is tax Chinese products because what they have done is manipulated their currency so that so many -- when I build a building, so many of my products, unfortunately, are ordered from China because our companies can't compete fairly because of the fact that their currency has been manipulated so low.

By taxing their -- number one, it would take in a lot of money, but I'd put a 25 percent tax on Chinese products unless they came to the table and started treating us with respect and treating us fairly, in which case I wouldn't need the tax.

By the way, as soon as I did, that they would come to the table, and they would make a deal that would be very, very good for this country.

But two things would take place. Number one, we're start making products because that would take over for the unfair manipulation of the currency, and number two, because of that, we'd start creating jobs in this country.

Ben Bernanke said a couple of weeks ago that it's going to be five years before we start getting good job growth. Well, I don't think it's ever going to happen because by that time China, India, other countries will have all of the jobs. We won't need any jobs.

KAYE: Well, sir, you have all these ideas and things that you want to do for when you are president. You've been teasing about running for president. Of course, there's this website shouldtrump.com, people weighing in on whether or not you should run. Tell us, when do you plan to decide, or are you here to break some news today?

TRUMP: Well, I'd love to give you some news. But frankly, we need something. This country needs something quickly. I will decide to run one way or the other by June.

KAYE: All right, you heard it here, by June. We hope you come back and talk to us about it when you do decide to run.

TRUMP: OK. It's been a great honor. Thank you very much.

KAYE: Donald Trump on the phone with us this afternoon.

Up next, ever heard of Esperanza Spalding? She beat out Justin Bieber for best new artist at the Grammys last night, and it's trending. We'll play you some of her music next.

(COMMERCIAL BREAK)

KAYE: It is the biggest night in music, and there was no shortage of surprises or opinions on last night's Grammys, especially in two of the biggest categories, album of the year, and best new artist. And who better to break it all down for us, the big night, than "SHOWBIZ TONIGHT" anchor Brooke Anderson. Hey there, Brooke.

BROOKE ANDERSON, HLN CO-HOST, "SHOWBIZ TONIGHT": Hi there, Randi. Yes, the Grammys are always unpredictable, and I've got to say maybe the biggest award surprise of the night was Canadian rockers Arcade Fire winning the coveted Album of the Year trophy. Even they could not believe they won. Watch and listen to their reaction. Do we have it?

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: What the hell? Thank you.

(END VIDEO CLIP)

ANDERSON: Yes, the Montreal-based Indy band beat back the huge front-runner Eminem, who came into the show leading with ten nominations. Maybe next year, Em. One of these days I know Eminem is going to win album of the year.

And there obviously were not enough Grammy voters with Bieber fever last night, because 16-year-old Justin Bieber left the Grammys empty-handed. Jazz Bassist and singer Esperanza Spalding bested Bieber for best new artist. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Esperanza Spalding.

(APPLAUSE)

(END VIDEO CLIP)

ANDERSON: Wow, congratulations to her. And she gained thousands more twitter, thousands more twitter followers last night after her exposure. We just checked. She's got over 8,000 twitter followers.

And Randi, her rep told "SHOWBIZ TONIGHT" that Esperanza and Justin Bieber bumped into each other back stage, had a nice chat, and Justin was very, very gracious, so no hard feelings.

KAYE: I'm sure he was.

What about Lady Gaga? She certainly had a very unique arrival, if we want to call it that. But did she live up to last year's hype? I'm hearing a lot of comparisons between her and Madonna, too.

ANDERSON: Well, you bring up a good point, because it's not the egg she arrived in, nor the message she was trying to send that has people screaming copycat today. It is the song this way, "Born this Way" that is being compared to Madonna's "Express Yourself" from 1989. Some are watching it here saying Gaga's long blond ponytail and performance were a rip off from Madonna's blond ambition tour. Take a look.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: She's an amalgamation of a lot of different styles and artists and inspirations. She does admire Madonna.

UNIDENTIFIED FEMALE: Absolutely, as we all do. Madonna, you know, icon. But enough is enough, kids. Everyone is inspired from different places. That performance was unstoppable and nothing like blond ambition.

(END VIDEO CLIP)

ANDERSON: OK. Sorry about that. We ran that sound a little bit early. That was Lori Ann Gibson, Lady Gaga's creative director and choreographer who told me, as you heard, that the Madonna comparisons are absolutely ludicrous, and she says that Madonna is an original and to say otherwise significant or not.

Lori Ann was also behind the entire concept, the incubation on the red car net, the hatching and the whole nine yards, and told me Gaga was birthing a new race, where everybody is equal, embrace who you are at birth, and emerge new and fulfilled. So Randi, Gaga walked away from the Grammys with three awards and with loads of new controversy, and I think that is just how she likes it.

KAYE: I think you're right, that controversy seems to follow her wherever she goes, blond, blond ponytail or not. All right, Brooke Anderson for us. Thank you, Brooke.

And time now for the CNN political ticker. Mark Preston joins me from Washington with the latest. Hi there, Mark.

MARK PRESTON, CNN SENIOR POLITICAL EDITOR: Hey, Randi, how are you? Not only has President Barack Obama taken a lot of criticism in the last couple of hours for his proposed budget cut from conservatives and from Republicans, but he's also getting some heat from the left.

Let's look at what the Progressive Change Campaign Committee has said regarding President Obama's budget, which just arrived on Capitol Hill a short time ago. Every cut to necessary programs like Medicare, education, and heating for low-income seniors needs to be judged in the context of the unnecessary tax cuts for Wall Street millionaires that passed at the end of last year. Now, what the PCCC is saying right there is that the Bush-era tax cuts that were extended back in December didn't really agree with, but President Obama went along with them anyway. Republicans were really pushing for them, and what they're saying now is if you can do that, Mr. President, then you can spare the rod so to speak from some of these programs that President Obama is thinking of cutting.

But one place where Democrats do seem to agree on is that they don't like Republicans or certainly don't like Republican policies, in general. The Democratic National Committee just put out a web video a few hours ago that seems to take a little bit of a poke fun at Republicans, specifically, speeches that occurred over this past weekend at the CPAC conference here in Washington, D.C. What they've done is that they've taken little snippets from the likes of Rand Paul who's calling for the abolition of the Department of Education.

Newt Gingrich who called for the replacement of the EPA. Tim Pawlenty who's calling for the repeal of Obamacare. They've shown this little snippets, and then, they show on the back end of the video, Randi, they show Democrats talking about the future and how they have the policies to turned the country around, so, there you are. That's the Democratic message, Randi, for this afternoon.

KAYE: All right. Thank you, Mark, and another update in about 30 minutes and updates online, of course, at CNNPolitics.com and on Twitter at Political Ticker.