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Stakes in the Debt Crisis; Tensions Skyrocket in Debt Talks; New Arrest in Murdoch Scandal; Giuliani's Back in New Hampshire; U.S. Women Reach World Cup Final; CNN Crew Under Fire

Aired July 14, 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, guys. Hello.

9:00 a.m. on the East Coast, 6:00 a.m. out West. Thanks so much for joining us.

A flashpoint in the nation's debt crisis. The president storms out of talks. The deadline looms. And Americans are reminded that a stalemate could cost each of us.

An arrest is made in the scandal that engulfed Rupert Murdoch's media empire. And the message is clear. Both the U.S. and Great Britain are turning up the heat.

In China, a section of bridge collapses. Sending a tourist bus plunging into the forest below and the death toll could get higher.

Well, the clock is ticking and tensions are soaring, and if you want an idea of just heated things are over the debt crisis, listen to this. President Obama storms out of yesterday's meeting vowing that he will veto any extension of the debt ceiling that's only short term. Sources say the frustrated president said to the House Majority Leader Eric Cantor, quote, "This could bring down my presidency."

Today top congressional Democrats and Republicans returned to the White House for a fifth straight day of talks. But the August 2nd deadline is looming and pessimism is growing. In fact, a major rating agency says it will review the nation' sterling bond rating for a possible downgrade.

We're covering all the angles of this all-important debt talk story. Dan Lothian at the White House with reaction to the extraordinary ratcheting up of tensions. Ali Velshi giving us the bottom line on the economics. Why should you care that U.S. bonds could face a brutal reality check.

Ali, you know, let's start with you. A downgrade would be kind of like seeing your personal credit score just take a huge hit, right?

ALI VELSHI, CNN SENIOR BUSINESS CORRESPONDENT: Right. So we already have a debt problem. We already pay too much interest on too much debt. Downgrade would mean that the cost of borrowing which the U.S. has to do very regularly increases its borrowing would cost us more.

So it will actually set us back. So, you know, most thinking people think we need to avoid this debt limit not being increased.

Here are your three consequences, Kyra. First of all, if the debt limit is not increased, debt costs go up. Number two, it could freeze international borrowing and lending because the U.S. is the safest bet in the world to lend money to. If the safest bet all of a sudden becomes less safe it turns the whole system upside down.

Number three, it just creates a lack of certainty and fear in the stock market, so a lot of people who their investments in 401(k)s and IRAs start to suffer and there becomes this flight to quality. You've heard this said before. People take their money out of the market, causing markets to drop. They put their money into cash or gold. You're seeing gold increase and more records being set over the last few days.

So at the moment, I'll tell you. Stocks are set to open higher this morning. That's because the smart money is that these guys will work it out, but it's 20 days away, Kyra. That's dog years as you know. Once we get close if this stuff keeps happening you'll start to see markets dropping, you'll start to see the dollar dropping, you'll start to see a lot of fear.

PHILLIPS: Yes. All right, Ali, we're going to keep talking.

Let's turn to the politics, shall we? The growing fear for the nation could be headed toward a new crisis. That's what's being said.

Dan Lothian there at the White House.

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, that's right. And you know, the big point of contention yesterday was with House Majority Leader Eric Cantor pushing for this short-term deal or a series of short-term deals. And the president, according to Democratic sources familiar with the talks, made it clear that that's something that he does not support, that's something he would veto.

The president has, for the last few days and certainly weeks as well, been pushing for the biggest deal possible where it seemed to get some support. Of late, it has not. The president believing that if you start talking about some of these short-term deals, you know, you run into the political season where you have to be negotiating these things all over again.

And he says if you can't get this done now, how are you going to get this in the middle -- in the thick of the political season? So, you know very tense discussions yesterday. The president agitated, believing that Republicans are using the debt talks to make political points.

And the president making the point, according to those inside the meeting, that this kind of atmosphere just confirms some of the worst fears that Americans have about the way that Washington works.

PHILLIPS: And Dan, well, yes, the way Washington works. I mean it's really hard to understand, you know, are they going to get anywhere? You've got the president of the United States saying this could bring down my presidency, storming out of the meeting and then Eric Cantor saying, well, this has erased any progress made so far.

LOTHIAN: Well, yes. And the hope is that perhaps they got all of this sort of tense tone out of their systems yesterday. They can come back today and really get some progress here. Some Democratic sources saying that they believe that the tone today will be much different, but, you know, the sides are still far apart when it comes to the issue of revenue.

Democrats believing that you need to get, you know, some money coming in and you do that by raising taxes on the wealthy. The president pointing out that that won't happen until 2013 and Republicans saying the way to get the revenue is by growing the economy. So those differences still remain.

No doubt that's something that will be sort of a central focus today as they sit down and talk again for the fifth day in a row. And they'll also be looking at, you know, what they have in common, where they can find some agreement, looking at yesterday, identified, according to sources, about $1.5 trillion. Can they find more areas where they can cut to reach around $2.5 trillion, what Republicans want?

So still far apart but the hope is that they can get something done in time to put together legislation and get it passed before that August 2nd deadline.

PHILLIPS: All right. Fingers, toes, everything crossed. Dan Lothian, thanks.

LOTHIAN: OK.

PHILLIPS: We are getting word this morning that Scotland Yard has actually made an arrest in the scandal that has rocked Rupert Murdoch's media empire. And yet another remainder of just how serious the hacking investigation is, London's top police officer faces a public grilling today.

Dan Rivers is on that for us.

Dan, what do you think?

DAN RIVERS, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, well, Sir Paul Stevenson, the top policeman in the UK, is being questioned at the moment by the Metropolitan Police Authority. Particularly coming under pressure because, this morning, they arrested a former deputy editor of "The News of the World," Neil Wallace.

This is arrest number nine as part of this and the other inquiry into corrupt or bribing police officials for information. Now the important thing here is that already we know that one of the senior policemen in Scotland Yard John Yates has already admitted having lunches with Neil Wallace, the man that's now been arrested.

So there's a lot of pressure on one senior policeman, John Yates, and therefore, in turn, a lot of pressure on the top policemen, Sir Paul Stevenson. The big picture here, though, is that Rupert and James Murdoch are being hounded really by the people in the building behind me to come and appear and justify what happened in their newspapers before a committee of MPs.

James Murdoch saying he can't make the date. Rupert Murdoch saying he doesn't want to turn up. This morning, a summons was issued to both men, trying to force them to come along.

It's a sensational turn of events here. Rupert Murdoch has gone from being, you know, admired and cozied up to by political parties on all sides, so now being effectively summoned to appear, almost like a criminal.

PHILLIPS: And we'll be following it closely. Dan Rivers, thanks so much.

Well, back here in the United States, Rudy Giuliani, remember that name? Yes? And he may possibly be giving another run for the White House.

Deputy political director Paul Steinhauser joining us.

So he's heading to New Hampshire, is he?

PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Yes, just when he leaves the spotlight he jumps right back in there. He shouldn't be sounding and looking like a presidential candidate today. In New Hampshire talking to Republican women's group along the sea coast.

And you know, that's what you do when you're running for president. So I asked one of Rudy's advisers the other. Well, what's the deal? Is he, isn't he? They say nothing has changed. He will have a decision later this summer if he's going to make another bid -- a second bid for the Republican presidential nominations.

Let's talk about Michele Bachmann. She is running. The congresswoman from Minnesota, of course. And guess what? Three polls out this week. Now three -- three polls and she is on the top of all three polls in Iowa. How about that? And also a national poll just came out this week as well and Michele Bachmann there is number two.

So she is definitely rising in the polls, Kyra. Been doing that since she did a pretty good job, I think people would agree, at our presidential debate in New Hampshire last month -- Kyra.

PHILLIPS: All right. And Jon Huntsman keeping up his attacks on Mitt Romney? You've been following this back and forth.

STEINHAUSER: Yes. Well, today, where's Mitt Romney? New Hampshire, of course. The state that has the first primary in the nation. Are we going to hear Mitt Romney respond to Huntsman? Huntsman has been attacking Romney over Romney's job as governor and dealing with jobs, creating jobs. And Huntsman saying now that Romney wasn't doing a good job when he was governor creating jobs. I don't think so. I talked to some Romney advisers, and they say, you know what? Mitt Romney is going to continue his attacks not on any other Republicans running for president but he's going to be like a laser going after President Barack Obama. It looks like Romney is already trying to run that general election campaign.

Also today I think you're going to hear Mitt Romney talk about the debt ceiling. He's been criticized lately for not talking enough about the negotiations so we'll keep our eyes on Mitt Romney as well today.

Kyra, back to you.

PHILLIPS: OK. Paul, thanks.

And we'll have your next political update in an hour. Also a reminder, for all the latest political news just go to our Web site, CNNPolitics.com.

The U.S. women's soccer team is one win away from hoisting the World Cup. They're going to actually face Japan Sunday in the championship after their 3-1 win yesterday against France and of course Zain Verjee now has been keeping a close eye on all the action.

Are you heading to the next game?

(LAUGHTER)

ZAIN VERJEE, CNN INTERNATIONAL ANCHOR: I am. I'm going to be in Frankfurt in Germany for the final, Kyra. Isn't that amazing? And if the U.S. team wins, everyone is going to have to call it soccer around the world and not football, OK?

(LAUGHTER)

PHILLIPS: Let's make it clear.

VERJEE: So, you know, did you watch the France/U.S. match?

PHILLIPS: I have to -- no. I'll be honest with you, I didn't. But I did see the highlights. Is that enough?

VERJEE: Yes, OK. No, that's more than enough, Kyra.

PHILLIPS: OK, good.

VERJEE: It actually ended up being a really good game. The U.S. started off kind of -- a little bit wobbly but then they got into their groove and, boom, goal, goal, goal. They were up 3-1 and that's how they finished the match. And -- so they face Japan on Sunday.

This team is really magical. A lot of people are saying that they hustle, they have a never-say-die attitude, they fight it out until the very last second. They are incredibly fit and incredibly talented. They play Japan and what's kind of interesting about Japan here, Kyra, is that the coaches actually showing the team in the locker room pictures of the tsunami and pictures of victims. And so it's also a really emotional thing for the Japanese side, too, because it's kind of a feel-good thing for the whole country.

So Sunday's match, whatever happens, is going to be really important for both sides. But, you know, big deal for the U.S. if they win. They won last in 1999.

PHILLIPS: That's right. I mean --

VERJEE: Remember?

PHILLIPS: I guess you could say Abby Wambach is the next Brandi Chastain?

VERJEE: Yes.

PHILLIPS: I mean Brandi Chastain really, you know, put a name to women's soccer. Yes, here you go. Now you've got Abby.

(LAUGHTER)

VERJEE: Yes, she is really a big star to watch. I mean, the U.S. team itself, the favorites to win the competition -- you know, there's all this anti-American sentiment around the world, right? But on Sunday, this weekend, the entire world and a lot of people in Germany are really rooting and cheering for the U.S. to win because it hasn't been a big sport in the United States the way it is around the world. So for this team to be victorious is really amazing.

And by the way, Kyra, I found a good fact for you. Football or soccer used to be called pig's bladder and that was because they blew up a pig's bladder and they tied it on both sides and started to kick it around. So they can use it as a nickname these days and they say, we're going to pay, you know, some pig's bladder.

PHILLIPS: A little pig's bladder.

VERJEE: So just a little useless information feed for the weekend.

PHILLIPS: Yes. Sounds like a rock band, it's more like.

All right, Zain. We'll be tracking this. We expect live shots from the game, too. We're looking forward to seeing you from there.

VERJEE: Yes.

PHILLIPS: Thanks, Zain.

VERJEE: See you. All right.

PHILLIPS: All right, well, stick with us and -- because team USA forward Abby Wambach who we're just talking about actually talked yesterday's big win and Sunday's championship game. And so she's going to be talking again, I guess, is this right? Live in the 11:00 hour? Coming up -- OK, coming up in the CNN NEWSROOM. All right, we'll hear from her again.

And a nation at war. CNN crew actually comes under fire.

(BEGIN VIDEO CLIP)

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: We are leaving this area. There is gunfire all around us.

(END OF VIDEO CLIP)

PHILLIPS: That is our Ben Wedeman actually caught in the cross-fire of Libya's civil war. He's going to join us live in just a few minutes.

And the war in Afghanistan may see something radically new in the near future. Talk about breaking new ground. These women are training to be pilots in the Afghan air force.

(COMMERCIAL BREAK)

PHILLIPS: Checking stories cross country.

In California, the feds deal a critical blow to the Mexican mafia's operation in Orange County. Ninety-nine alleged gang members rounded up and charged with crimes, including murder, extortion and drug trafficking. Operation Black Flag also seized weapons, everything from handguns to assault rifles.

Take a look at this group of pioneering Afghan women. They are in San Antonio, Texas. And they are trying to become some of the first female pilots in the Afghan air force. They're going to spend six to eight months to study English before they learn how to fly helicopters.

And we never get tired to seeing this. Jacksonville, Florida, Navy pilot Brad Hoyts (ph) surprises his son at preschool. Hoyts flies helicopter from a ship in the Persian Gulf. He hasn't seen his son in six months. He'll deploy again in less than a year.

Let's turn to that story that's dominated headlines. Just a few weeks ago, for many Americans, the civil war in Libya has slipped from the radar. But the fighting still rages on. And CNN crews remain in the thick of it.

Take a look at what happened yesterday in northwestern Libya. Folks caught in the cross-fire between the rebels and the government troops.

(BEGIN VIDEOTAPE)

(GUNFIRE)

UNIDENTIFIED FEMALE: Our driver!

UNIDENTIFIED MALE: Get in the car, Mary. UNIDENTIFIED FEMALE: You guys! Wait!

(EXPLETIVE DELETED)

UNIDENTIFIED MALE: Get in there.

UNIDENTIFIED MALE: Wait! Wait, wait, wait!

(GUNFIRE)

UNIDENTIFIED FEMALE: Wait!

UNIDENTIFIED MALE: Wait! Wait!

UNIDENTIFIED MALE: Are you in, Mary?

UNIDENTIFIED FEMALE: Yes, I'm in. OK, just calm down. We're cool.

(GUNFIRE)

UNIDENTIFIED MALE: Get down!

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: We're leaving this area because there is gunfire all around us. We believe that Gadhafi forces are doing a round-about movement. So we are rushing out of this area.

(END VIDEOTAPE)

PHILLIPS: We are happy to reporter that Ben Wedeman and his crew are safe and joining us today.

Ben, tell us what happened.

WEDEMAN: I'm sorry, actually, I think I've lost communications.

PHILLIPS: Can you hear me OK, Ben?

WEDEMAN: Yes, now I can hear you. Say again?

PHILLIPS: It's OK, Ben. We basically -- we set you up with the video of what happened when you tried to flee that area and that gunfight ensued. Tell us what you were trying to cover and what exactly happened.

WEDEMAN: Well, we had gone to this town of Goleash (ph) that we were going to investigate a report by a Human Rights Watch that the rebels had mistreated civilians and vandalized property. We got to the edge of the village. And, of course, you know there is no cell phone system here. So, really you just learn as you go along what's going on ahead of you.

Our drivers went to the top of a hill just to look into the town to see what was going on, to see if, indeed, Gadhafi's forces were there. What we found was just about 150 yards in front of them were two car loads of Libyan army soldiers. So the drivers came rushing down the hill. They were wearing sandals, running through thorns.

We started hearing gunfire coming in and as you saw that panic movement, we just rushed out of that area. That was really the beginning of a very long day during which this battle took place in which the rebels did manage to retake the town. We had a lot of other close calls with incoming rockets and gunfire as we approached the town where this battle was taking place.

So what you saw in that brief scene was really just a small slice of what happened yesterday.

PHILLIPS: Ben Wedeman, it's definitely a reality check of what is still existing there in that country. We haven't talked about this story in a number of weeks. You're keeping it in focus for us. Ben Wedeman, thanks.

Acceptance and rejections and still to be decided, those are the answers in the dating game for "Friends with Benefits" co-starts Mila Kunis and Justin Timberlake and a few good marines. We'll have that story coming up in THE NEWSROOM.

Also ahead, Minnesotans who want their Miller beer better stock up. It's going to be in short supply in just a matter to days. We'll explain.

(COMMERCIAL BREAK)

PHILLIPS: All right. How about some showbiz headlines for you?

High school got to end sometime, even on "Glee." Three of the show's stars will not be back for season four. According to the show's creator Ryan Murphy, Chris Colfer, Lea Michele and Cory Monteith will all graduate at the end of the season. Michele tried to console "Glee" fans on Twitter, saying, quote, "We always knew we'd graduate in real-time."

And don't go fighting at a Foo Fighters concert, because this is what will happen.

(BEGIN VIDEO CLIP)

DAVE GROHL, FOO FIGHTERS: Hey, in the striped shirt, look at me here, mother (EXPLETIVE DELETED), look at me, look at me, get out of my (EXPLETIVE DELETED) of show right now. Get the (EXPLETIVE DELETED) out!

(END VIDEO CLIP)

PHILLIPS: I wonder, though, exactly what he was doing. Well, leader singer Dave Grohl wasn't putting with it, he wasn't happy with the guy in the striped shirt. That's basically all we know. So, he halted a song of the iTunes Festival of London and basically just said, hey, get out.

And the prime time Emmy nominations are out picking up several nominations "Boardwalk Empire" and "Good Wife," "Glee," and "Mad Men." Coming up at 10:00 Eastern, CNN's Kareen Wynter will join us with a look at a few Emmy surprises this year.

Entertainer Justin Timberlake risks a real butt-kicking if he'd decline a dance offer with a member of the U.S. Marine Corps. His "Friends with Benefits" co-star Mila Kunis apparently has.

CNN's Zain Verjee live in London on more in this military dating game.

Now, hold on a second here. I thought Mila agree to go on a date with this Marine. And Justin Timberlake was giving her a hard time. And this female Marine wanted to ask Justin. I'm getting confused here, Zain.

ZAIN VERJEE, CNN INTERNATIONAL ANCHOR: It's all a big mess, Kyra. Don't worry. I am on it, every single angle of it.

Let me tell you what's going on here. What happened is Justin Timberlake was on an interview with me Mila Kunis on FOX. And basically, a male Marine from Afghanistan said to Mila Kunis via a video uploaded on YouTube, please be my date at a ball. And Justin Timberlake said, oh, go on, go on, and do it. And she said, OK, I'll do it.

And then a female U.S. Marine uploaded a video on YouTube and saying, yo, Justin, you know, if you're going to do that, why don't you be my date to a ball that's going on in Washington, D.C.? And her name is Kelsey Desantis.

Just listen to how she proposed.

(BEGIN VIDEO CLIP)

CORPORAL KELSEY DESANTIS, U.S. MARINE CORPS: So, Justin, you want to call out my girl Mila? Well, I'm going to call you out and ask you to come to the Marine Corps ball with me on November 12th in Washington, D.C. And if you can't go, all I have to say is, cry me a river.

(END VIDEO CLIP)

VERJEE: Do it for your country, Justin!

So, Kyra, you know, she is a black belt in karate. So, I think he better say yes. She has this Facebook page friends have put together, saying, come on, Justin, do it.

So, let's see what happens. I think he should for his country, don't you?

PHILLIPS: Sure. It would be so patriotic.

VERJEE: And, Kyra, Mila Kunis, by the way, has said she cannot make the date that she initially said yes to because she has filming scheduling conflict. Come on.

PHILLIPS: She could the Marine to that.

VERJEE: Move it. PHILLIPS: Yes, come on now.

All right. We'll follow it. Zain, fun, fun.

All right. Minnesota state government shut down nearly two weeks ago. Workers forced to stay home. State parks closed.

But here's a new one. No more Miller beer.

Alison Kosik, are you serious?

ALISON KOSIK, CNN CORRESPONDENT: I am serious, serious.

Sure, if you want to a cold one in Minnesota, you're going to have fewer choices. Thirty-nine brands of Miller Coors beer are literally being pulled from every store, every restaurant, every bar in Minnesota. I'm talking about Coors, Miller, Foster's Blue Moon and Milwaukee's Best.

And would you believe this is all because the Minnesota government shut down?

Miller Coors apparently didn't get its brand licensing renewed in time for the government shutdown on July 1st because what has to happen is the label on each brand of beer, it has to be registered with the state. The thing is the company did put the application in, but guess what? The government shut down the very next day.

And you know what? We are chuckling about this, Kyra, you know, but this is a big deal for small businesses in Minnesota. Miller Coors supplies almost 40 percent of the beer that's sold in Minnesota. So, you know what? If you can't find a beer, you can always go for the Jack Daniels, right?

PHILLIPS: Yes, there you. A little J.D.

All right. We will talk to you coming up in just a moment again. Thanks, Alison.

All right. He's climbed Mt. Everest, but he is against higher debt. He's in favor of online poker. He also sets the record for vetoes when he was governor. Who is this interesting character?

Gary Johnson. We are going to talk to him because he wants your vote for president.

(COMMERCIAL BREAK)

PHILLIPS: Checking top stories.

A section of a bridge has collapsed in China causing a tourist bus to drive right off of it. The Chinese government say one person killed. Other reports say the death toll is climbing.

President Obama storms out of yesterday's meeting after another Republican proposal for a short-term deal on the debt talks. We're told the negotiations will resume this afternoon.

A House hearing on the Consumer Financial Protection Bureau gets under way this hour. Republicans want to know why the agency still has no director one week before beginning work.

Gary Johnson wants to be president. Before you say Gary who, he's a former two-term governor of New Mexico. He favors the fair tax. He set records for vetoing legislation, nearly 800 bills. But he also competes in triathlons. He climbed Mt. Everest. Oh, and by the way, he even helped also to put a fire out with his feet. Yes, he's quite an intriguing character to say the least.

Gary Johnson joins us live from New York on why he wants the White House.

So, Governor, you've been campaigning for 17 months. You've visited 38 states and when it comes to the issues, we can say you are definitely provocative. Let's go ahead and get right to it. You're pro marijuana.

So why do you believe that legalizing wouldn't lead to increase in young people and more people driving while high?

GARY JOHNSON (R) PRESIDENTIAL CANDIDATE: Well, if you look at the only two countries in the world -- Portugal and Holland, which have, I would say, rational drug policy, each of those countries has 60 percent the drug use that of the United States. That's on a per capita basis. But that's kids, that's adults, that's marijuana and that's hard drugs.

So Kyra, that kind of flies in the face of what you would think would be increased drug use. Portugal, 10 years ago, decriminalized all drug use because they had a heroin epidemic. And over the last 10 years they've shown a 50 percent decrease in heroin use having decriminalized heroin. What they're doing is they're looking at the problem first, as a health issue, rather than a criminal justice issue.

Look, there have been millions of Americans that have gone to jail for drugs. There have been a hundred million Americans who haven't gone to jail because of the same offenses but haven't been caught doing that. There's a real hypocrisy in our drug laws, they're very discriminatory.

Half of what we spend on law enforcement, the courts and the prisons is drug related and what are we getting for it? Well, we have 2.3 million people behind bars. We have the highest incarceration rate of any country in the world.

PHILLIPS: Issue number two: poker players. You've tapped into quite an unusual constituency here.

What is it with you and poker? Are you a gambler?

JOHNSON: You know, Kyra, I think the poker issue is indicative of dozens of other issues where the government steps in and gets in the way of a person's passion.

You know, the federal government outlawed online poker playing and about six weeks ago, they closed down all online poker playing worldwide for U.S. citizens so they froze $100 million in assets. They really took poker away from 10 million poker players' ability to be able to play it. So they got into that person's passion.

My passion is downhill skiing and mountain biking and you know what? Right now, the federal government is restricting my access to public lands, trails on public lands as a mountain biker, and yet they'll allow horses and the excrement that goes along with horses on the public lands.

A very small example, mountain biking; a very big example, poker playing. Even a bigger example, drugs.

PHILLIPS: But even -- OK and critics would come back and say, OK, you know, Governor Johnson, we are in a bad situation right now. Bad economy. People are desperate. They're doing anything now to make a buck. And legalizing marijuana, you know, saying that poker is OK.

Is this the right time for those two issues to be on your agenda?

JOHNSON: Well, they are indicative of everything that's on my agenda which is the cost-benefit analysis to everything government is doing.

What are we spending our money on and what are we getting for the money we are spending? So when it comes to online poker, why not create tens of thousands of jobs in this country to accommodate 10 million Americans' passion to play poker? When it comes to drugs, I'll just get back to the fact half of what we spend on law enforcement, the courts and the prisons is drug-related.

Kyra, it is never going to be legal to smoke pot, become impaired, get behind the wheel of a car or do harm to others. It's never going to be legal for kids to smoke pot or buy pot. But the situation that we have today, right now is, is that we are arresting and we're sending to jail people that sell small amounts of drugs on numerous occasions and they're getting caught for that.

This is much the same as prohibition of alcohol in the '20s. Who got rich in the '20s? Border violence with Mexico. Look, this is a prohibition phenomenon. A legalize marijuana and arguably 75 percent of the border violence with Mexico goes away because these are disputes played out with guns rather than the courts.

PHILLIPS: I'm still trying to figure out how Portugal plays into the U.S. when it comes to marijuana but Gary Johnson, we will be talking again, I'm sure.

Appreciate your time today

JOHNSON: Thank you. Thank you.

PHILLIPS: You bet. UK tabloids now find themselves in the headlines next to the words like hacking, eavesdropping, bribery. What about the American press? Well, we're going to talk to a media ethicist that says, oh no, we're not like that. Matter of fact, we're even better.

It has become a national problem, sexting. But in Rhode Island, if you're underage, the police say don't do it. We're talking about that after the break.

(COMMERCIAL BREAK)

PHILLIPS: Allegations of hacking, eavesdropping, bribing police. UK tabloid reporters aren't just covering it, they're being accused of doing it. So the prime minister has launched a huge investigation and now some U.S. lawmakers want their own probe. But, why? Are we, U.S. journalists, really that dishonest when it comes to pursuing a scoop?

Kelly McBride says no way. She teaches media ethics at the Pointer Institute. Media haters here in America, you better listen up because Kelly even says the UK tabloid scandal is vindication of American journalism.

Kelly, tell us how we are so upstanding when we look what is happening overseas.

KELLY MCBRIDE, MEMBER, ETHICS FACULTY, POINTER INSTITUTE: Well, I don't -- did we just lose the connection?

PHILLIPS: No. We're together. You are live. We can hear you great.

MCBRIDE: OK. I'm sorry.

So I don't think that the American press is that much better than the British press, but what I do think is that we don't have the systemic corruption that we're seeing in the British press.

We have a lot of problems in the American press. You know, the economy has killed American newspapers. We probably have 30 percent fewer journalists. The journalism that we do here is weaker than it used to be. But what we don't have is systemic corruption. When we have scandals in the American press, they tend to be singular in nature. Like a Jason Blair or a Jack Kelly, one individual who has done a really, really bad job and caused a lot of damage.

But what we don't have is entire staffs doing -- seeking -- or teaching each other how to do criminal behavior and setting up to distort the -- to distort the truth purposely, which is what we are seeing in the British press right now.

PHILLIPS: And Kelly, one more question. Unfortunately, your signal is locked up. We can hear you, we just can't see you, but we've got video of course, out of London. I just want to ask you quickly, because you point this out and you're right, that in England, there are laws controlling what information can be printed and when.

Our First Amendment makes that unconstitutional so why are we witnessing that in the UK if, indeed, those laws exist?

MCBRIDE: Yes, you're right. They are much more heavily regulated than we are in the United States. We hardly have any regulation of journalism. But what we do have is self-regulation. And a lot of journalists who have worked in both Britain and the U.S. point out that in the U.S. we actually -- we in journalist, think pretty highly of ourselves and we talk about our work as a profession and we have professional associations that create standards and essentially create an ability for us to self-regulate. And you don't see that as much in Britain, especially with the tabloids.

Here, our tabloids are constantly arguing that they're legitimate journalists and they're seeking legitimacy among their peers, their more established peers. In Britain, the tabloids are not seeking legitimacy at all and they don't want to be recognized by their peers as legitimate, good journalists. And I think that's because when you regulate from the outside, there's less incentive to regulate internally.

PHILLIPS: Kelly McBride teaches media ethics at the Pointer Institute.

Kelly, thanks so much.

And if you want to read Kelly's CNN.com piece, her opinion piece, just head over to CNN.com/opinion. You can even join her in the discussion.

A new foreclosure headline great news. Foreclosure filings plunged nearly 30 percent in the first half of the year. But, be sure to read the fine print because the picture isn't as rosy as it seems.

And problems, too, for this church singing group. A trip they planned may never get off of the ground because of the expensive baggage fees.

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PHILLIPS: Checking stories across country.

A group of teenagers in Illinois are planning a church trip to perform music in California. But we're told now it may never happen. Why? Well, the airline is charging them $6,000 in baggage fees. The Lighthouse Church of All Nation's doesn't know how it's going to raise the money.

Wait until you see the one that didn't get away. A man at a bachelor party near Galveston, Texas lands a 9-foot long bull shark. We're told the bride so far hasn't gotten away either. But the group caught several more sharks. Zachary Celsus's (ph) was easily the biggest.

And in Providence, Rhode Island a new law allows police to charge young people under 18 for sexting and there are even stronger penalties for people who send photos to others.

Foreclosure filings plunged nearly 30 percent in the first half of the year. Sounds good but all is not what it seems. Alison Kosik, at the New York Stock Exchange -- Alison.

KOSIK: Yes you think it's good news, the headline sounds good but when you look deeper, you read deeper into the report and you find out why.

What's happening is banks are actually they're taking their time foreclosing because remember that robo-signing scandal last year? Well, banks got into a lot of trouble for signing off on foreclosures without following the proper protocol.

So guess what, now they're crossing their T's, they dotting their I's, and they're taking a lot longer to process the average foreclosure. Now, it takes about 318 days, that's almost a year to process an average foreclosure. I'm talking about from the initial notice to the final sale. What you see happening is just kind of kicking the can down the road, meaning get ready for more foreclosures to flood the market -- Kyra.

PHILLIPS: All right, Alison Kosik, thanks.

So from the bull pen to the red carpet. San Francisco Giants Brian Wilson trades in his uniform for a one-piece spandex tuxedo. Sports and a little fashion in seven minutes.

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PHILLIPS: Stories making news later today,

In New York, a civil rights group says it will begin picketing outside the home of News Corp CEO Rupert Murdoch. That demo is set for 12:30 Eastern.

At 2:00 p.m. Eastern in Grand Rapids, Michigan, the funeral service for former First Lady Betty Ford is set to get under way.

And at 4:15 Eastern at the White House, congressional leaders meet again with President Obama on the growing debt crisis.

We're following a lot of developments in the next hour of the CNN NEWSROOM. Let's check in first with White House correspondent, Dan Lothian -- Dan.

LOTHIAN: And President Obama has set Friday as the deadline for the congressional leaders to figure out which direction they are going as the White House figures out how we can prevent the economy from being impacted by the debt ceiling. I'll have more on this story at the top of the hour.

VERJEE: Hi, I'm Zain Verjee in London. The U.S. women's team could clinch the soccer World Cup. I'll let you know what newspapers are saying about this and how exciting this weekend game is going to be.

POPPY HARLOW, CNNMONEY.COM: And I'm Poppy Harlow in New York. We sat down with the President's right-hand man on jobs, Jeff Immelt, the CEO of General Electric to talk about job creation and what on earth they are going to do to bring this unemployment rate down. And also the impact if we don't see an agreement on the debt ceiling and what that impact is going to be especially to all the small business owners out there across America. We'll have that coming up in the next hour.

PHILLIPS: All right, thanks guys.

And after a decade at war, medical breakthroughs and cutting-edge techniques. Healing our soldiers while defending our country. Barbara Starr join me to talk battlefield breakthroughs in the next hour.

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PHILLIPS: Well, the U.S. women's soccer team is one win away from taking the World Cup. Jeff Fischel, I tell you what, guys and gals watching this closely saying these women are some pretty awesome athletes.

JEFF FISCHEL, HLN SPORTS ANCHOR: They are playing great and its bringing back memories of '99, 12 years ago the world paid attention to the U.S. winning the World Cup and again this team is looking great and there's still one chapter to write. Let's hope it finishes with a happy ending.

Like that win over Brazil, the U.S. relied on one of the game's great headers to advance. Here's Lauren Chambers (ph) Taking a corner kick -- and guess -- Abby Wambach leaves the head and into the goal. That makes it 2-1, U.S., and an insurance goal from Alex Morgan. Watch the moves and score. The U.S. wins 3-1 taking on Japan for the title on Sunday.

Life is great for the Yankee fan who caught Derek Jeter's 3,000th hit; two people have pledge $50,000 to Christian Lopez. He has big college debt and now faces a tax bill for the Yankee swag he got for handing over the Jeter ball. And get this. Topps, the baseball trading card company is coming out with a card of Lopez. Come on, a baseball card. That's every kids' dream I guess.

More evidence that San Francisco Giants closer Brian Wilson is just a different kind of guy. Check out the one-piece spandex tuxedo, gloves included he wore to the Espy awards last night. The bow tie is orange as you would wear it for his Giants uniform. Wilson was also wearing ninja socks sent to him by a fan. Sadly Wilson will have to don a dull gray road uniform tonight as baseball returns from the all-star break. Wilson never one to shy away from attention. But still, styling, I suppose.

Finally, a story that will make doffers (ph) want to toss their clubs. This is 6-year-old Reagan Kennedy of Bloomington, Illinois. She was playing around with her family last week when she hit a hole in one. Here's was just as amazing, she didn't go screaming down the golf course. She walked back quietly to the cart like she'd been there before because dad had taught her about golf, you're not supposed to make noise on the golf course.

So she didn't make noise but her parents said, you know what, this is one time that you can make a little noise on the golf course. PHILLIPS: But here is the best part too, she all -- all she cares about is beating her dad. I got a hole in one -- ok, whatever -- but I'm going to beat my dad. That's the best part.

FISCHEL: She did on that one whole. That's for sure.

PHILLIPS: 6 years old. That's right. It's awesome. Got to love it. She's headed for the tour.

FISCHEL: She's great.

PHILLIPS: Thanks Jeff.

Justin Timberlake has a big decision to make and he's being told that he better do it for his country or else. Will he be a good American? Here's Jeanne Moos

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT: This female marine is asking Justin Timberlake out on a date.

CORPORAL KELSEY DE SANTOS, U.S. MARINE: Well, I'm going to call you out.

MOOS: Hoping he'll take his own advice.

JUSTIN TIMBERLAKE, SINGER: Do it for your country.

MOOS: That's what Timberlake told his co-star, Mila Kunis after a male Marine stationed in Afghanistan tilted his shades and asked Mila out via YouTube.

SGT. SCOTT MOORE, U.S. MARINE: Hey Mila, Sergeant Moore, but you can call me Scott.

UNIDENTIFIED FEMALE: What?

MOORE: I just want to take a moment out of my day to invite you to the Marine Corps Ball on November 18th in Greenville, North Carolina, with yours truly. So, take a second to think about it and get back to me.

MOOS: Now chances are the last time Mila Kunis was asked out on a semi-blind date was is when CNN's own Wolf Blitzer invited her to the White House correspondence dinner.

MILA KUNIS, ACTRESS: This is my date, Wolf.

MOOS: And though Wolf is more famous than Sergeant Scott Moore, the sergeant had Justin Timberlake on his side during a Fox News interview.

TIMBERLAKE: This needs to go down. This needs to happen. Do it for your country.

KUNIS: Ok. I'll do it for you.

MOOS: You do it for your country, Justin Timberlake, because now this Marine wants you.

DE SANTOS: So, Justin, you want to call out my girl Mila. Well, I'm going to call you out and ask you to come to the Marine Corps Ball with me on November 12th in Washington, D.C.

MOOS: Corporal Kelsey de Santos is the only female Marine at the Martial Arts Center for Excellence at Quantico. She's an instructor with a black belt who sometimes does cage fights.

Kelsey is a fan of Timberlake's. She got the idea to invite him to the Marine Corps Ball after seeing him so enthusiastically tell Mila Kunis to go.

Her friends set up a Facebook page called Let's Get Justin Timberlake to the Marine Corps Ball with Kelsey, complete with an array of photos so impressive. Well, how could Timberlake tell her to go jump in a lake or even a river.

DE SANTOS: And if you can't go, all I have to say is, cry me a river.

(MUSIC)

MOOS: Hey, the corporal has got a tattoo, too. And that's just the one we can see.

When we asked the friend who helped set up the Facebook page whether Kelsey could kick Justin Timberlake's butt if he turned her down, she said, oh, yes, for sure, this Marine isn't looking for a few good men, just one.

TIMBERLAKE: Do it for your country.

MOOS: Jeanne Moos, CNN, New York.

(END VIDEOTAPE)