Return to Transcripts main page

CNN Newsroom

President Obama to Hold News Conference; Prices Rising Up to 10 Percent; Romney has Big Lead in New Hampshire; Italy PM Berlusconi Faces Trial

Aired February 15, 2011 - 09:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Good morning, you guys. 9:00 a.m. on the East Coast, 6:00 a.m. out West.

This morning, we are talking about your wallet and your world. We are following two major stories. First up, prices are rising. Food, clothing, appliances, just about everything you buy is about to cost more.

Then more protests ripple across the Arab world. More violence erupts. Two of the targeted regimes are U.S. allies. A third a U.S. foe. All could have a direct bearing on the United States.

But we begin this hour with some developing news. Just minutes ago, the White House announced that President Obama will hold a morning news conference. It comes just one day after releasing his proposed budget and amid rising tide and protests and violence that's sweeping through the Arab world.

We've got a preview with CNN's Kate Bolduan. She's at the White House -- Kate.

KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Kyra.

Well, yes, we did find out just a few -- just a short time ago that the president will be holding a press conference at 11:00 Eastern here at the White House. We look through our records and we believe the last time the president had held an extended press conference if you will -- something more than a couple of questions -- was back in late December so reporters are definitely looking forward to speaking directly with the president and getting some answers directly from the president.

I'm told from a senior administration official that the president is looking forward to talking about the budget this morning. I'm sure that's no surprise coming one day after releasing his $3.7 trillion budget proposal and it's probably likely that the White House, the president himself, wanting to kind of answer critics directly and to kind of sell the budget and lay down his priorities, and tell why the priorities are where they are and why the cuts were needed as we heard a little bit yesterday when the president spoke in Baltimore County.

But we're all very much looking forward to hearing directly from the president this morning. It looks like we're going to get the chance -- Kyra. PHILLIPS: All right. Sounds good, Kate. Thanks so much.

And of course stay with CNN for the president's news conference. As Kate said, it's scheduled in less than two hours from now, 11:00 Eastern Time. You'll see it right here live on CNN.

We're going to stay on that topic of money. The dollar in your pocket is about to buy less. Get ready for some sticker shock on what you eat, what you wear, even how you live.

Christine Romans, part of the CNN Money team joining us live from New York to break down the bottom line for all of us.

Hi, Christine.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Hi there, Kiran.

Well, the prices of just about everything are rising and quite frankly many companies are saying after absorbing price increases because of raw materials and because of higher labor costs around the world, that they're finally going to start passing those -- or trying to pass those on to consumers.

Among the things you might see quite quickly, there's a freeze in Mexico that could mean higher costs for tomatoes and for cucumbers and for produce. Meat and dairy prices have been going up. Grain prices have been soaring for about a year now. So you're seeing those things go up.

You could see about 3 percent increases for poultry and for meat and you could also see more increases 3 to 4 percent for things like cereal. Cereal companies are actually saying that maybe they won't pass it on to you as higher prices for the box of cereal but it might mean fewer manufacturers' coupons, something a lot of people have been relying on to take 30 cents or 40 cents off a box of $3 box of cereal.

Cotton prices are at record highs. Kyra, they've doubled over the past year. A lot of different reasons for this. You got some of the crops in Pakistan and in China and in other places had a bad year last year. You've also got allegations of hoarding of some of these things. But you could see t-shirt prices raise maybe 10 percent. You could see underwear prices rise.

You have -- lots of the clothing companies have been saying that they will be passing on strategic prices increases to consumers. Even shoe prices could go up.

How about this for refrigerator. LG says it's going to start prices because of higher raw material costs, higher metal costs. Whirlpool has said it will begin raising prices so your appliances are going to start becoming more expensive.

And even things like soap and toothpaste, Kyra. Maybe 1 percent or 2 percent increases there. Things like palm oil. Those are ingredients in some of these beauty products and health care products that we use. But also packaging. (INAUDIBLE) cost are moving higher. And again, I will point out something that economists have been telling me for months now. The Federal Reserve keeping interest rates very low, Kyra. They're pumping $600 billion into the economy. There are economists who are saying that that is making commodities hot. And that's one of the reasons why traders and investors have been pumping money into the value of commodities. That's also driving things up even as there are some of these weather disruptions around the world.

And a lot of demand from places like China, Russia and then Brazil, from emerging economies around the world. All of these things conspiring to mean that you could be seeing these prices this year -- certainly the latter part of this year -- Kyra.

PHILLIPS: OK. Not exactly what we want to hear but we'll take it, Christine.

ROMANS: You're welcome.

PHILLIPS: All right. Let's turn to the Arab world now in the wake of the revolution in Egypt. Across the region, protests spread, the violence deepens. And here are some of the latest flashpoints.

At least 10 people injured today in Yemen. Anti-government rallies demanding the ouster of the U.S.-backed president there. One human rights activist says that pro-government gangs converged on the demonstrators as riot police just stood by and watched.

Then in Bahrain, the demonstrations have turned deadly. Witnesses say security police fired on a funeral procession. Mourners were actually honoring a protester who was killed and one man died in today's violence.

Bahrain is an important U.S. ally as well, and a critical hub for our Navy.

We're also keeping a close eye on Iran. Tens of thousands of protesters marched to the streets of Tehran. Security forces responded with batons and tear gas. Videos like this that we're posted online show us exactly how that went down. And dozens of people have been detained.

The government is not only taking a hard stand in the streets, well, take a listen to this in Iran's parliament.

Believe it or not, those are Iranian lawmakers calling for the execution of the two opposition leaders. They say they've been inciting the demonstrations and for that they should die.

Now Egypt and the latest developments there. The new transitional government is asking the United States to freeze the financial assets of ousted President Mubarak and some of his former officials. That's according to a senior official in the Obama administration. Switzerland has already done that.

Meanwhile, Egypt's new government is reaching out to the public via the social media. The Interior Ministry has created a Facebook page. It hopes to foster better relations and improve the image of Egyptian police.

And here's another sign of change. The Muslim Brotherhood is applying to become an official political party in Egypt. President Mubarak's government had banned the group. The Muslim Brotherhood says that it does not plan to run a candidate for president.

All right. Well, the West Coast is getting hit with storms and mountain snow. While the central part of the country is actually taking a break from the cold.

Rob Marciano is tracking it all.

It's not a bad part for certain parts of the country.

ROB MARCIANO, AMS METEOROLOGIST: Yes.

PHILLIPS: Bad day rather for certain parts of the country.

MARCIANO: Yes, well, West Coast kind of acting as our blocking back here. So they are kind of taking the brunt of the storms that are rolling across the Pacific and heading right into Oregon, Washington, and northern California.

Parts of western Washington again yesterday got hit with some heavy winds. Take a look at some of these video. A number of trees down across the Seattle area. Kitsap County, as a matter of fact, 40,000 people without power this morning because of downed trees with power lines. And at one point, northbound lanes of I-5 were blocked because a tree was down across the interstate.

So still turbulent weather here across this part of the world and there's a couple of more disturbance that are going to roll through the area.

(WEATHER REPORT)

MARCIANO: Little Rock, Arkansas which saw about six inches of snow last week and parts of the state north and west of Little Rock saw two feet. They got hit 72 degrees yesterday. So --

PHILLIPS: 72?

MARCIANO: That's right. Yes.

PHILLIPS: Wow.

MARCIANO: Some areas that were minus 30 last week, setting all-time record lows in Oklahoma. By Thursday, will be touching 70 as well so we're talking about 100-degree switch in temperature in one week.

PHILLIPS: All right. You know what that sound is, right?

MARCIANO: (INAUDIBLE). Yes. Answer in the form of a question. What you got? PHILLIPS: We won't talk about some of our colleagues but haven't fared so well on the show but that's a whole another story. I'm going to put you to the test.

MARCIANO: No, you're not.

PHILLIPS: Battle -- no, this is the big battle last night. Man versus computer. You've been following all this, right?

MARCIANO: Yes.

PHILLIPS: You've got Watson, IBM's super computer, took on two "Jeopardy" champions. All right? And here's a clip from that.

(BEGIN VIDEO CLIP)

ALEX TREBEK, HOST, JEOPARDY: And anytime you feel the pain, hey, this guy refrain, don't carry the world upon your shoulders. Watson?

WATSON, IBM COMPUTER: Who is Jude?

TREBEK: Yes.

WATSON: Olympic oddities for 200.

TREBEK: Milorad Cavic almost upset this man's perfect 2008 Olympics, losing to him by one hundredth of a second.

(END OF VIDEO CLIP)

PHILLIPS: Are you ready for your question?

MARCIANO: Good. I'm glad it wasn't that one.

(LAUGHTER)

PHILLIPS: Are we going to put him on the spot? Really?

MARCIANO: That was?

PHILLIPS: I was just going to make up a question for you. Who almost threw in the streak of an Olympian in 2008?

MARCIANO: Dorothy -- what is Dorothy -- who is Dorothy Hamill?

PHILLIPS: 2008. We're not going back to short and sassy and ice skating back when I was, what, 8?

MARCIANO: Yes. I know. Who is Steve Mayer? Who is --

PHILLIPS: I had the shampoo.

MARCIANO: Ben Johnson? Who is -- what is that? Is that -- Michael -- who is Michael Phelps?

PHILLIPS: Hey. MARCIANO: Thank you. Thank god I was not up against the computer.

PHILLIPS: You get a free CNN mug.

MARCIANO: Was that before or after?

(LAUGHTER)

PHILLIPS: After the little --

MARCIANO: Yes. Close.

PHILLIPS: A little nip-nip.

MARCIANO: Nip-nip and sneaky pooh?

PHILLIPS: Yes. Well, in the end, Watson actually tied the contestants Brad Rutter.

MARCIANO: Good. So the computer didn't fall on that.

PHILLIPS: Exactly. And beat Ken Jennings by 3,000 points. That was just round one. They're going to play again tonight and tomorrow night.

And our Jason Carroll is actually going to have a little bit more on this in just 20 minutes. Maybe I should put him to the test, too. What do you think?

MARCIANO: I -- you know, he aired some highlights of what he did.

PHILLIPS: He did?

MARCIANO: He didn't do so well himself. I hope they air all of that just so I can redeem myself or at least misery loves company, that's for sure.

PHILLIPS: You know what? We know you're the smartest guy.

MARCIANO: That's right. I just like to play stupid. It's my way of relating to everybody.

PHILLIPS: Thanks, Rob.

MARCIANO: See you in a bit.

PHILLIPS: See you.

Well, if your college economics professor became your marriage counselor you'd be all set for years of wedded bliss. At least that's what a new book says. We're going to talk to the authors.

Plus an alleged shoplifter, armed and desperate, pulls a gun on the security workers who confronted him.

(BEGIN VIDEO CLIP) UNIDENTIFIED FEMALE: You have to make a decision. Do I fight for my right or do I stand here and watch?

(END OF VIDEO CLIP)

PHILLIPS: Well, they got the gun away. Might have saved some lives. What did they get in exchange? Fired. Wait until you hear about this.

(COMMERCIAL BREAK)

PHILLIPS: Topping our look Cross Country this morning, from the mouths of babes.

(BEGIN VIDEO CLIP)

CAMERON BARILONE, FIVE-YEAR-OLD (singing): Luck be a lady tonight. I fell into a ring of fire.

(END VIDEO CLIP)

PHILLIPS: Far more mature than his five years of age might suggest, you're witnessing Cameron Barilone's first gig as a professional singer. He actually packed the house on Sunday at the Calhoun Restaurant in Saugus, Massachusetts. Call it the family business. Dad's an entertainer, too.

Keeping it in the family, in Oklahoma City, eight-year-old Demarray Love helped his mother deliver his baby brother over the weekend. He jumped into action. His mom's contractions came before the doctor, and mom, baby, and big brother, well, they're all said to be doing fine now.

And in Denver, this disturbing sight near a local duck pond. This Canada goose is suffering from an arrow shot through his torso. Volunteers tried to catch and treat the bird, but still didn't have any luck.

Well, you know that old saying, no good deed goes unpunished. It rings so true near Salt Lake City at a Wal-Mart. Four loss prevention workers do their jobs. They prevent the loss of a computer, then survive a potentially deadly encounter with the shoplifter that they saw swipe it. And guess what Wal-Mart rewards them with? Pink slips. Yes, fired all four for breaking some rules.

You know what? When you're trapped in a room with a desperate felon who has a gun and a rap sheet a mile long, don't you think all bets are off? Are you really going to just stand there and think about your Wal-Mart handbook and policy AP 09? Watch this story from Andrew Adams of KSL TV and we'll talk.

(BEGIN VIDEOTAPE)

GABRIEL STEWART, FORMER WAL-MART EMPLOYEE: Absolutely time stopped. I didn't know what to do. ANDREW ADAMS, KSL TV CORRESPONDENT (voice-over): Gabe Stewart froze. A gun pressed into his back, he was pushed up against a wall. And Justin Richins and Shawn Ray were backed against a closed door.

SHAWN RAY, FORMER WAL-MART EMPLOYEE: He looked right at me and said, "The gun is cocked. Come on, guys, just let me go. I don't want to do this. I don't want to hurt anybody."

JUSTIN RICHINS, FORMER WAL-MART EMPLOYEE: "Don't make me do this."

RAY: "Don't make me do this."

ADAMS (voice-over): It was January 13th inside this Wal-Mart on Hillfield Road. A police report obtained by KSL shows Trent Allen Longton was seen stashing a Netbook computer inside his clothes in the electronics department here.

Then, he headed toward the front of the store. These workers approached, escorted him to the loss prevention office. That's where Longton took out the laptop and then, a loaded handgun. Bullet in the chamber, he rushed the workers, pushing the gun into Stewart.

RAY: I reached up and grabbed his wrist and his shoulder and spun him around.

LORI POULSEN, FORMER WAL-MART EMPLOYEE: I was thinking, whose house am I going to tonight to tell their family that their loved one was shot?

ADAMS (voice-over): As their protection supervisor, Lori Poulsen says they went hands on. She ripped the gun away. They restrained him until the police arrived.

POULSEN: And you have to make a decision. Do I fight for my life, or do I stand here and watch?

ADAMS (voice-over): Game over. Happy ending, right? Fast forward one week.

POULSEN: They called and set up the appointment for me to come in and be terminated from the company.

RICHINS: Said "You're fired. You're being terminated for violation of AP 09."

ADAMS (voice-over): AP 09 is Wal-Mart's policy on dealing with shoplifters. It shows employees are allowed to use reasonable force to limit movements of struggling suspects, but if a gun comes out, associates must disengage and withdraw. In this case, withdraw where? These workers say they had nowhere to go and no other real option.

RAY: The police had told us we did everything right.

ADAMS (on camera): Layton Police say Longton, a convicted felon with a loaded gun, multiple outstanding warrants, and a long criminal history, likely would have faced a stiff police response outside. GARRETT ATKIN, LIEUTENANT, LAYTON, UTAH POLICE: Then likely they are going to -- produce their handguns and try and take the person into custody because you've got to be ready for it.

ADAMS (voice-over): While Layton PD would not comment on the appropriateness of these workers' action, the officer in the police report says it was in his and citizens' best interest and safety to take the suspect to the ground. Longton was initially charged with five crimes. This week, he pleaded guilty to two counts, robbery and possession of a gun by a restricted person.

ATKIN: After taking his statements, along with the information that they learned from the store employees, the officers felt that probable cause existed for the charges that I outlined.

ADAMS: Wal-Mart responded to KSL's calls and e-mails with a written statement. "We appreciate the intentions demonstrated by our associates in this situation, but the actions taken put their safety and potentially the safety of our customers and other associates in jeopardy." The statement also points out that workers knew the rules before they acted. No consolation to Stewart and the others.

STEWART: I honestly felt worse than when I had the gun to my back. I honestly felt betrayed.

(END VIDEOTAPE)

PHILLIPS: And did you still hear what was in that police report? That it was in the, quote, "citizens' best interest to take the suspect to the ground."

These were loss prevention employees. They're supposed to spot the bad guys and prevent loss. That's what they did. Instead, they lost their own jobs.

One of those employees, Lori Poulsen, who you heard from, actually told CNN that she knew they might be violating Wal-Mart policy, but they just couldn't let a gunman roam throughout the store with all of those customers inside.

Good for you, Lori, and good for all four of you that became Wal-Mart heroes. Now, stay tuned for this Thursday, we're trying to get all four of those guys on for our 30-second pitch. We're going to try and help them get new jobs.

Well, getting ready to get married? Bring an opened mind, a lot of patience, and your Econ 101 book. We'll explain.

(MUSIC - "Love and Marriage")

(COMMERCIAL BREAK)

PHILLIPS: OK. All couples want a happy, healthy marriage. And for women, maybe that means, your husband does the dishes, bathes the kids, fix things around the house. And men, maybe you'd like your wife to mow the lawn, take out the trash, change the oil in the car. Well, the guys here on the floor are saying yes to that. Am I stereotyping or what?

All right, forget about all of that. How about just turning to the business of marriage? It's called "Spousonomics," using economics to master love, marriage and dirty dishes.

"New York Times" writer Jenny Anderson and Paula Szuchman, an editor at "The Wall Street Journal," actually wrote the book. They join me live from New York.

So, ladies, all the guys here on the floor are giving the thumbs up to mowing the lawn, doing the dishes, cooking, all that kind of stuff. But let me first start with how you came up with this idea. Either one of you, Jenny or Paula, go ahead.

JENNY ANDERSON, CO-AUTHOR, "SPOUSONOMICS": The financial crisis was just getting started. It was 2007. Sort of the world was meting down. And we saw these crazy parallels in the financial world and in our marriages.

We were newly married and, you know, headlines every day. Is Citibank too big to fail? Moral hazard? We thought, is marriage just a construct for too big to fail? Do people take advantage of each other, do they act recklessly because they've just got married?

Perverse incentives. That's what caused the housing crisis. Wait a second. Perverse incentives, is that what I need to get my husband to do more dishes?

We started seeing some parallels, and we were both business journalists, and we started digging in a little more, and we were pleasantly surprised by the number of parallels that actually did exist.

PHILLIPS: OK, well let's talk about one of the parallels. Paula, let's talk about fighting. So many times, couples don't fight fair. Somebody always wants to get that last word in, that last -- that zinger. And they want to win. So, how do you make the parallel here, and what the heck do we do about that?

PAULA SZUCHMAN, CO-AUTHOR, "SPOUSONOMICS": Of course, this has nothing to do with my own marriage. It doesn't happen at all --

(LAUGHTER)

PHILLIPS: Your husband --

SZUCHMAN: But what I've heard --

PHILLIPS: Do not take note here.

SZUCHMAN: He's home with the baby. No. A lot of couples when they start fighting, they -- exactly. They get into a vicious cycle. They want to be right. They dig in their heels, and at a certain point it becomes less about resolving conflict and more about winning, especially the later on at night it gets.

And they keep telling themselves, "We can't go to bed angry, we can't go -- we have to resolve this." But at some point, resolving is just code for being right.

And we talk about the behavior economic theory of loss aversion, which says we hate to lose so much that when we sense we're losing, whether it's a million dollars or a fight with our husbands, we start acting irrationally and doing anything we can to win, and that's actually not a good idea and a good time to take a time-out.

PHILLIPS: Oh, boy. It's so hard to take a time-out. You feel like you're three and you've been sent to the corner.

(CROSSTALK):

SZUCHMAN: And --

PHILLIPS: All right, Jen, maybe that's not a bad thing.

ANDERSON: You actually -- and lock yourself in the bathroom and count to 20.

SZUCHMAN: Yes.

PHILLIPS: Right. Take some deep breaths.

ANDERSON: See where you get. You can start with small time-outs, and then they can get longer and longer.

PHILLIPS: Oh, easier said than done. All right, Jenny, let's talk about sex. Everyone talks about.

ANDERSON: Let's talk about sex.

PHILLIPS: Yes, let's talk about sex, shall we? All right. And how nobody is having it.

ANDERSON: Isn't there a song about that?

PHILLIPS: Yes, really. And once again, not talking about your marriages. All right, so, Jenny, tell me about --

SZUCHMAN: All hypothetical.

PHILLIPS: All hypothetical, while your husband's home with the baby doing the dishes. OK. Tell me about avoiding market noise as you describe it, Jenny.

ANDERSON: Avoiding market noise. That is a great tip. Market noise is all of the activity in the market that says, "Go buy pets.com because you're going to get really, really rich and everybody around you is getting really rich." And so, you run out and buy pets.com, and suddenly, you're bankrupt.

So, market noise is just all the activity in the market, all the noise that can influence your decisions. Warren Buffett has a great saying, "When I need to make a decision, basically, I look in the mirror." He knows what he wants, he makes a decision based on what he knows. He reads annual reports for companies year after year, when the price is right, he buys it. He doesn't listen what's hot and what's new and what's crazy.

That's true in your marriage, too, right? Every other couple is going to -- I remember over Christmas, we kept thinking, it seems like everybody's doing something nicer than we are, and they're going to more exotic places, and they're doing really cool things. Wait a second!

SZUCHMAN: Having sex five times a week.

ANDERSON: Yes, exactly. Taking cool classes, learning all these things.

SZUCHMAN: They're so happy!

ANDERSON: You know what? Do I want to be taking a cooking class with my husband? No, not really. I can think of ten other things I want to be doing, but as soon as you hear it, you suddenly rush home, and you say, "Would you like to take a cooking class?" No, not really. OK. "Well, maybe we should."

So, market noise and herd behavior is sort of what causes big boons, big bubbles in economies, and it can cause the same thing in your marriage.

PHILLIPS: And Paula, you lay out this prescription for fixing your sex life. You compare it to supply and demand. So, you be more transparent.

SZUCHMAN: Yes.

PHILLIPS: You reset your habits. You send informative signals to your partner.

SZUCHMAN: Right.

PHILLIPS: OK, explain.

SZUCHMAN: Well, the idea is, a lot of couples we talked to said they wish they were having more sex, but for some reason, they weren't. The number one reason they gave us is that they were to tired, followed shortly by too busy.

The question is, how do you get around that? Because everybody wants to be having more sex. So, our theory, of course, goes back to economics, as it should with sex, and we say lower the cost in order to up demand.

Keep it simple, be transparent, say what you want. Don't -- You know, send clear signals. You don't need 20 scented candles and hot oils. You can just do it.

(CROSSTALK)

PHILLIPS: You know, and Paula --

ANDERSON: There's a great expression --

PHILLIPS: Hold on, Jenny, hold that thought. Because Paula, you wrote this article in "The Wall Street Journal" yesterday, and this got us talking. It was titled "The Secret to a Happy Marriage." Do the dishes, put out, don't talk so much. You even throw in lose weight. What the -- ? I mean, are you serious? You sound like a sexist!

SZUCHMAN: I know. I will say, this -- those were not aimed specifically at women. Those were aimed at both -- I think there's a little misunderstanding. But it seemed like half the people who read it were like, "Right on, that is what marriage is about," and half the people were like, "You're insane."

But it goes for men and women. Jenny talked about moral hazard and this idea that people see their marriage as a safety net, where they can -- and couples told us this. "He used to be so romantic before we got married, there used to be more affection."

PHILLIPS: Yes, they get comfortable.

SZUCHMAN: He didn't go to the bathroom with the door open. You get comfortable. And your marriage is not too big to fail, as the divorce rate will show. So -- and there's also new research that says married people actually exercise less than single people.

So, I'm just suggesting, go to the gym. Keep up appearances.

PHILLIPS: Well, you two ladies look fabulous.

SZUCHMAN: Men and women.

PHILLIPS: And the book -- the book is great. Jenny and Paula, boy I want to have cocktails with you once I give birth to these twins, and leave them with the spouse to do the dishes --

SZUCHMAN: That'd be great.

PHILLIPS: Watch the kids, mow the lawn, and all that stuff. Ladies --

SZUCHMAN: And we'll do the same.

PHILLIPS: Ladies, the book is called "Spouseomics: Using Economics to Master Love, Marriage, and the Dirty Dishes."

Paula and Jenny, thanks. That was fun.

SZUCHMAN: Thank you.

ANDERSON: Thanks for having us. PHILLIPS: All right.

(STOCK MARKET REPORT)

PHILLIPS: And it is just past 9:30 in Philly, 6:33 in Fresno. Right now we're watching the post-Egyptian revolution in the Middle East. Anti-government protests in Bahrain, Yemen, and Iran -- violence in all three countries. At least two deaths in Bahrain. Iranian politicians saying two opposition leaders they are saying should be executed.

Plus, things don't seem to be getting any better between NFL owners and players. They're butting heads over pay. The league says the players are trying to run out the clock on negotiations and might lock players out in just a few weeks. We're going to have more on this at the bottom of the hour.

And we're just about 90 minutes away from the president's news conference. Apparently he's something important to tell us about the budget. CNN's Best Political Team on Television is all over it and we're going to join them just before the president speaks.

Plus, Alex Trebek, Watson, the super computer, and our Jason Carroll. All the makings for a quiz show extravaganza. We'll take you inside the battle.

(COMMERCIAL BREAK)

PHILLIPS: It's men versus machine and, well, the men ain't winning. Legendary Jeopardy champs Ken Jennings and Brad Rutter taking on what looks like an oversized iPad, but it's much more than that. Just ask Jason Carroll. He knows firsthand what it's like to take on IBM's Waston computer.

You know, Jason, I think this is how the movie "Terminator" starts. A couple quiz shows, and boom, we're all ruled by machines.

JASON CARROLL, CNN CORRESPONDENT: Yes, it's all innocent, right, until the thing goes online. We'll see. Well, let's explain what this is all about, Kyra. First, it was, you know, IBM researchers fed Watson -- that's the name of the computer -- encyclopedias, dictionaries, bibles, movie scripts, you name it, more than 200 million pages of data. And then they taught it strategy. Now, they think Waston's ready to take on Jeopardy's best.

So let's take a look at what's going on. You've got in one corner, you've got the challenger, that's IBM's Waston. He's 10 refrigerator- sized racks of IBM computers. And then in the other corner you've got the legendary champions Ken Jennings, holder of the longest Jeopardy- winning streak, 74 games. Then you also have Brad Rutter, undefeated champion and the show's biggest money winner.

So, last night, the three men -- actually, two men and one computer -- squared off in first of three nights of competition. How'd it all turn out?

Take a look.

(BEGIN VIDEO CLIP)

KEN JENNINGS, JEOPARDY CHAMPION: You can't psych that guy out.

CARROLL: No, you can't.

JENNINGS: It's never going to get cocky, it's never going to get stage fright. It's just implacable. It's like the "Terminator." It just keeps coming.

CARROLL: Can the creator beat what's created?

UNIDENTIFIED MALE: Absolutely not. I'm one of the worst Jeopardy players on the face of the planet. Not got at it at all.

CARROLL: I'm not either --

(END VIDEO CLIP)

CARROLL: Well, actually, we spoke to Ken Jennings and the lead researcher, as you see there, about what it was like to face off against the computer.

But we also wanted to find out what it would be like for a regular sort of, you know, non-champion, such as myself, to take on Watson.

Take a look.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Our contestants are Jason from CNN, and Watson from IBM.

CARROLL: I'll take "Those animals frighten me" for 400.

UNIDENTIFIED MALE: Herpetophobia. Watson?

WATSON: What is reptile?

UNIDENTIFIED MALE: Watson?

WATSON: What is Baghdad?

UNIDENTIFIED MALE: Correct. Watson?

WATSON: What is Birmingham?

UNIDENTIFIED MALE: Yes. Watson?

WATSON: What is Buffalo?

UNIDENTIFIED MALE: Buffalo. Yes.

Well, you ran that category, Watson.

CARROLL: I have no idea.

UNIDENTIFIED MALE: Question mark was not what we were looking for.

How much did you wager, Watson? $26,599, bringing you up to just a dollar short of $60,000.

CARROLL: I want you to know I did know a lot of these answers, but I couldn't - I couldn't -

UNIDENTIFIED MALE: The buzzer is hard.

CARROLL: I couldn't figure out how to buzz in.

Well, that's humbling.

(END VIDEOTAPE)

(LAUGHTER)

PHILLIPS: Jason, I'm sorry. I have to laugh.

CARROLL: That was my problem, it was the buzzer.

PHILLIPS: It was the buzzer, it wasn't your brain. It was the buzzer.

CARROLL: It wasn't my brain. Well actually, look, let's be honest, Kyra, even if my buzzer was working, Watson still would have slaughtered me in that. I mean -- but there was one category Watson didn't do well. I didn't do any better myself. Laundry detergent. For some reason that stumped him. Watson was unable to answer a lot of questions in that particular category.

PHILLIPS: I don't think he does his laundry.

CARROLL: Clearly, neither do I.

(LAUGHTER)

PHILLIPS: For full disclosure and let I'm going to let all our viewers know, you know, I always take an opportunity to mention this at any time.

CARROLL: Ut-oh, what?

PHILLIPS: Jason and I went to college together, we worked together in many a markets and he is one of the brightest men I know.

(LAUGHTER)

PHILLIPS: And he definitely -- he got straight A's in college. So, you know what? Watson can go take a hike, OK?

CARROLL: That's right. Let's unplug good old Watson.

PHILLIPS: There you go. CARROLL: Let's try that.

PHILLIPS: Adios. It's a computer, for God's sakes. And it takes you a while to think of the answers.

That was great, Jason. That was fun.

CARROLL: All right.

PHILLIPS: Thanks so much.

CARROLL: Best of luck. See you.

PHILLIPS: Well, what lies below. In Colombia, soldiers have found what they call a narco-sub. What was in it ? Coming up in just a few minutes.

(COMMERCIAL BREAK)

PHILLIPS: Northern California has fallen victim to a pretty shifty cat burglar. Sure, Dusty is your ordinary house cat during the day, wandering around the home like he owns it. But when the sun goes down, he hits the street. In just three years dusty has stolen 600 items from neighbors, yes, including underwear. Dusty prefers briefs. Neighbors say that they don't file police reports because they know where to get their stuff back. And no one knows where Dusty will strike next.

Here's a question that sommeliers likely have never heard. What wine is best served with linoleum? Here we go. Oh, it's going to be coming. This poor shop worker stacks bottles neatly into the store shelves, OK, doesn't even have time to step back and admire his handiwork. Oh, yes. It all comes tumbling down, sending him high- stepping for safety.

So what is a mobile investigative team not mobile? When it doesn't go anywhere? A $31 million federal budget item is among those wacky budget cuts being proposed by the president. CNN's political editor has that in three minutes in our political update.

And a judge gives the OK for the trial against Italian Prime Minister Silvio Berlusconi to go ahead. He's facing charges involving an underage prostitution case. We got that, too.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

GEORGE LOPEZ, COMEDIAN: Everybody remembers the Chilean miners, right? There's a book that came out that said that when they were trapped underground, they were smoking pot and there are still two dudes down there watching cartoons. They weren't even really trapped. They were trying to pull the push door.

(END VIDEO CLIP) PHILLIPS: New Hampshire holds the nation's first presidential primary; an early win that can actually catapult the candidate into the front runner spot.

Senior political editor Mark Preston, at our political -- our political desk. So who's looking good in New Hampshire, Mark?

MARK PRESTON, CNN SENIOR POLITICAL EDITOR: Well there should be no surprise but the former Massachusetts governor, Mitt Romney who actually owns a house on Lake Winnipesaukee in New Hampshire fares the best in this new WMUR UNH poll. We got the poll right up there. Mitt Romney comes in at 40 percent, Rudy Giuliani the former New York City mayor comes in at 10 percent and Tim Pawlenty the former Minnesota governor comes in at seven percent and Mike Huckabee, the former Arkansas governor comes in at seven percent.

Now look, Kyra, we are a year away from the New Hampshire primary. There's still a lot of time for somebody to try to make some ground on Romney. In fact, the poll asked have you made up your mind when choosing a presidential candidate; 78 percent of likely Republican voters said they are still deciding who to vote for. So plenty of time up in New Hampshire -- Kyra.

You know, we talk a lot about the federal budget and what President Obama is proposed cutting. Check out this story on CNNMoney.com. Our friend up there Charles Riley has the story titled "The Wackiest Budget Cuts". And you tease it right before the break; $31 million dollars for a mobile drug investigative team that's supposed to operate in rural areas. The problem is, it wasn't operating in rural areas. It was operating right near the DEA agency headquarters in metropolitan areas, so President Obama is suggesting they cut that program.

He's also suggesting that $1 million be cut for a scholarship program for Olympic hopefuls. One other thing I found interesting in this story up on CNNMoney.com is that there's a $10 million study of micro nutrients that President Obama wants slashed.

And of course, add all these together, it sounds like big bucks to us but the deficit is so high right now that conservatives will say there needs to be more and more spending cuts -- Kyra.

PHILLIPS: All right, well, another potential GOP candidate heading to Iowa, right?

PRESTON: Yes. The Mississippi governor Haley Barbour will be heading out to Iowa for an Iowa Republican Party-sponsored lecture series, heading out to the quad cities next month. You know, going back to that New Hampshire poll, Kyra, Haley Barbour only comes in at one percent in this New Hampshire poll.

But I'll tell you what, he's a very likeable fellow, he's very smart and should he get into the race he is going to be considered a formidable candidate for the Republican presidential nomination -- Kyra.

PHILLIPS: All right, Mark Preston. Thanks so much.

We'll have your next political update in about an hour and you can always get news -- political news 24/7 at our Web site CNNpolitics.com.

All right, "Flashback", February 15th, 1978: boxing great Muhammad Ali took on the boxing gold medalist from the 1976 Olympics, Leon Spinks. It was Ali's 58th professional fight; Leon's seventh. After 15 grueling rounds Ali lost that title to Spinks, it was an upset that reset seven months later when Ali regained his title defeating Spinks in New Orleans.

(COMMERCIAL BREAK)

PHILLIPS: Well, grab your passport. We're going to bring you stories around the globe.

Italy's playboy Prime Minister Silvio Berlusconi may be facing the biggest threat in his career. Thanks in part to his well-documented libido.

CNN international anchor, Zain Verjee has been following the latest developments live from London -- from London. You just -- you just can't get enough of the smut, can you, Zain?

ZAIN VERJEE, ANCHOR, CNN INTERNATIONAL: You -- you just can't -- I mean, today was an important day though, for the Italian Prime Minister Silvio Berlusconi because he is now going to face trial. The charges are that he had sex with a 17-year-old dancer called "Ruby the Heart Breaker" and he -- and paying for anyone for sex under the age 18 is illegal in Italy and he's also charged with using his influence to get her out of police custody when she was accused of theft.

Silvio Berlusconi is saying that -- he denies this allegations, that it's all disgusting and that it's not true. And guess what, Kyra, the case when it goes to trial on April the 6th is going to be heard by three women. There were thousands of women out on the streets all over Italy protesting against the 74-year-old Prime Minister saying that Italy is not a brothel. It's a country of values, and they really don't like these bunga-bunga parties and the -- the sex parties and the strippers that he had over in his apartments.

What he's saying is that these were elegant parties. Now, the issue here, though, Kyra, is that it could really plunge Italy into a crisis.

Something a little less smutty Kyra for you that I have been looking at out of Colombia is a narco sub-story. Now, you forget about the yellow submarine. This is a narco submarine and this was discovered in jungles in Colombia. Somebody got a tip about it, and what's important and different about this story is that usually some of the submarines that go through water and traffic all the drugs you can actually see them a little bit above water.

But this was right under water and it could have gone all of the way to Mexico. It was empty and nobody got arrested. But just take a look at that picture, the narco submarine -- Kyra.

PHILLIPS: I -- I'm sorry, I'm still caught up in the Berlusconi story and the bunga-bunga party.

(CROSSTALK)

PHILLIPS: Could you please -- could you please tell me what a bunga- bunga party is. Or was that a Zain Verjee made-up word?

VERJEE: Well, Kyra no, no, no. Bunga-bunga is being thrown around left, right, and center in Italy. It is a sex party -- Kyra.

PHILLIPS: Oh, my, my.

Ok, Rob Marciano, you were just saying you knew what that was.

VERJEE: I can expand on that, if you like.

PHILLIPS: Yes, I think we'll move on. Rob is turning red. And we've got to talk about other news. Zain Verjee, thank you so much.

We are developing or we are looking at a number of other developing stories in the next hour of CNN NEWSROOM. Let's start with Kate Bolduan. She's live in Washington -- Kate.

KATE BOLDUAN, CNN CORRESPONDENT: Hey there, Kyra. Well, you have seen his budget and now you'll hear directly from the President himself in a presidential press conference. I'll have more at the top of the hour.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I'm Christine Romans in New York. We're going to look at all of those pages of that budget and find out what it means for your kitchen table economics, when you buy a car, when you buy a house, when you pay the mortgage and when you fly in an airplane. I'll have that in the next hour.

ROB MARCIANO, AMS METEOROLOGIST: And I'm Rob Marciano on the CNN Severe Weather Center. The West Coast is getting hammered by a couple more storms, heavy rain and mountain snows and wind, and a warm-up under way across the central part of the country. Of course, pictorials from the latest bunga-bunga parties here. That's all in the next hour. See you there ladies.

PHILLIPS: Kate is going to have everybody serious. She's at the White House. So Christine, there you go, she can shake her head. Thank you all very much.

Also ahead, flying can definitely be a pain. We know that, right? Especially if you ad crummy weather into the mix but now a California lawmaker is taking another stab at a passenger bill of rights. So we're going to take a closer look at what he wants airlines to do to make sure that you don't get stuck on that runway for hours with no water, no food, no nothing.

(COMMERCIAL BREAK)