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New Video of Norway Blast; U.S. Teen Guilty in Cartel Beheadings; Vote Delayed as Debt Deadline Looms; Dangers of a U.S. Downgrade; Extremes in the Debt Debate; Reports: Al Qaeda Collapsing; U.S. Olympic Skier Takes Own Life; Memphis Schools Cut Deal to Open; $799,000 for South Dakota Town; Small Wal-Mart Hits Chicago; Stocks Struggle; Alec Baldwin's Tweet Marathon

Aired July 27, 2011 - 10:00   ET

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

KYRA PHILLIPS, CNN ANCHOR: Ok. Checking top stories, new video out of Norway shows the exact moment the Oslo bomb went off; last Friday's blast captured by some store security cameras here.

And a 21-year-old man charged with threatening to kill President Obama Uzbekistan native was busted after buying a machine gun from an undercover agent.

And a 14-year-old assassin convicted in a Mexican court. He's American. We'll tell you about the jaw dropping charges.

It's July 27th. Welcome to ground hog day, folks. In Washington, the only movement in the debt crisis seems to be another step closer to the August 2nd deadline.

In less than six days now, the federal government could run out of money and default on its bills. This hour on Capitol Hill, that doomsday scenario is spelled out pretty clearly.

Executives from credit rating agencies will warn lawmakers of the far reaching impact of a U.S. downgrade. One debt plan backed by House Speaker John Boehner is yanked from a scheduled vote today.

The Congressional Budget Office said that it savings were overstated and the numbers need to be crunched again. And then there's this, Senate Minority Leader Mitch McConnell says it's time for his fellow Republicans to accept something, quote, "less than perfect."

We're covering all the angles of this developing story. Joe Johns is in our Washington Bureau. Dan Lothian at the White House. Joe, let's go ahead and start with you.

Publicly the GOP seems to be standing pretty firm, but we're hearing reports now that that may not be the case behind the scenes. Is that true?

JOE JOHNS, CNN ANCHOR AND CORRESPONDENT: Well, honestly, I'll tell you. That goes all the way back to last week. I talked to some Republican members of Congress the last, you know, freshmen or people who have been in just for one term. And I was getting the impression even then that there were some people who had said they really didn't think they would ever be able to vote to raise the debt limit.

Now beginning to look at this as a question of whether or not the United States economy would be simply thrown under the bus if they didn't.

So that's the kind of thing that people are looking at, stark realities and rethinking their positions. And you'd expect to happen quite frankly.

PHILLIPS: All right, well, Dan, what can you tell us about contingency plans in case there's no agreement?

DAN LOTHIAN, CNN WHITE HOUSE CORRESPONDENT: Well, first of all, when you ask that question here at the White House, what officials will tell you is, that they fully expect that there will be some kind of agreement.

And so that's not something they really have to worry about. Nonetheless, they will also tell you that it would be prudent and unwise I guess if you didn't have some kind of emergency plan.

What those details are, we don't know, but obviously it would involve who would get paid, who wouldn't get paid, how they will have to stretch the money that they do have.

But certainly behind the scenes, both here at the White House and the Treasury Department, there are plans that they're working on just in case they're not able to meet that August 2nd deadline.

PHILLIPS: OK, so, Joe, Senator McConnell calling for GOP concessions. How is that playing with Republicans?

JOHNS: Yes, good question. Frankly, this is the kind of thing that McConnell has been playing all along. He's sort of tried to be the adult in the room simply saying we got to look at realities here, we need to go back to the drawing board. We need to get back into the negotiation room.

And try to hammer something out, recognizing that everybody's not going to get everything they want, which is pretty much a common sense and balanced view on Capitol Hill. The question is how many of those so-called Tea Partiers, the conservatives who really think the government is simply spending too much and needs to be scaled back.

How many of those will actually be brought along particularly in the House and can they do it in time or are they going to have to get just a little bit more time to come up with anything.

PHILLIPS: All right. Dan, finally, you know, does the Boehner delay and comments from McConnell bring a mood of optimism at all to the White House? LOTHIAN: Well, look, the White House obviously has been frustrated that it's taken this long for anything to happen. But they are still optimistic.

These ongoing talks that have been taking place over the last couple of days, we haven't seen anything in front of the camera, but there have been discussions between officials here at the White House and lawmakers up on Capitol Hill.

And they do remain optimistic. Nonetheless as I pointed out earlier, they are prepared just in case that deadline is not reached.

PHILLIPS: Got it. Dan Lothian and Joe Johns, thanks so much, guys.

Remember that 1970s documentary scared straight? Well, right now on Capitol Hill, lawmakers are getting their own dose of sobering perspective.

They're hearing from credit rating agencies on the far reaching impact of a U.S. downgrade. It's a doomsday scenario that could happen even before we reach the August 2nd deadline. Ali Velshi tells us what it would mean.

(BEGIN VIDEOTAPE)

ALI VELSHI, CNN AMERICAN MORNING ANCHOR: A bunch of people said who are the debt rating agencies? What do they do, who pays them, who believes them, why does it matter?

Let me tell you about the debt rating agencies. You have S&P. You've got Moody's and you've got Fitch. Fitch has been relatively silent in here, but both S&P and Moody's have said it's entirely likely that they will downgrade the U.S. credit rating.

Now the U.S. has had AAA credit rating. It has had one since 1917, since Moody's first started rating the U.S. Now, these credit rating agencies are important because what they assign your debt determines how much interest you pay on your money.

Those countries that are the lowest risk or companies that are the lowest risk pay the lowest interest. They have the highest credit rating. So it's important to know what they do because if they do downgrade you, there's a chance, it's not entirely sure, but there's a chance that the U.S. will then pay more to borrow and other people will look at other places to invest their money.

(END VIDEOTAPE)

PHILLIPS: And speaking of investors, the concerns over a possible ratings downgrade has weighed on Wall Street in recent days and some experts say that the markets will take a huge hit if the downgrade actually happens.

Deals on paper are one thing. Actual votes are quite another. And the question isn't whether leaders like Boehner, Reid and McConnell can close the deal. It's whether the base on either side will let them. CNN's Jim Acosta explains.

(BEGIN VIDEOTAPE)

JIM ACOSTA, CNN CORRESPONDENT (voice-over): The showdown over the debt ceiling has stretched the capitol to its extremes with Tea Party Republicans pulling on one side and liberal Democrats tugging on the other.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: President Obama, quit lying.

(END VIDEO CLIP)

ACOSTA: Freshmen Republican Congressman Joe Walsh posted a video on his House web site accusing the president of lying about the possibility that Social Security checks could be delayed if the country goes in to default.

REPRESENTATIVE JOE WALSH (R), ILLINOIS: That's not being truthful to the American people.

ACOSTA (on camera): Is it appropriate to say the president is lying?

WALSHI: Again, I didn't call him a liar. In that case, he lied.

ACOSTA: You're basically calling him a liar.

WALSH: Exactly and I'm not going to walk back from it.

ACOSTA (voice-over): But back in the late '80s, President Ronald Reagan warned the same thing could happen during his own debt ceiling standoff.

RONALD REAGAN, FORMER U.S. PRESIDENT: This brinkmanship threatens the holders of government bonds and those who rely on Social Security and veteran benefits.

ACOSTA: On the Democratic side, Congresswoman Sheila Jackson Lee has suggested Republicans are sticking into the president because of his race.

REPRESENTATIVE SHEILA JACKSON LEE (D), TEXAS: Why is he different? In my community, that is the question that we raise. Why this president?

ACOSTA (on camera): Do you think it could be racial?

LEE: Well, let me say this. I'd like to get past the personal and I think -- I pose the question and I think those individuals need to answer the question.

ACOSTA: Is it a fair question?

LEE: I think it's a fair question. ACOSTA (voice-over): Instead the reason may be pure politics. When George W. Bush was president, the Congress voted to raise the debt ceiling seven times. On nearly every occasion, dozens of Republicans including many of today's GOP leaders voted yes.

ALICE RIVLIN, PRESIDENT'S DEBT COMMISSION MEMBER: I have never seen anything like this. I think it's very scary and very embarrassing for our system of government.

ACOSTA: Alice Rivlin, a veteran of past budget battles says President Obama is also to blame for walking away from the recommendations of his own debt commission.

RIVLIN: I think everybody missed an opportunity, both the president and the leadership of the Congress.

ACOSTA: In part, that's because the leaders aren't really leading. One side of Congress is answering to conservatives who won't give on taxes. The other won't touch entitlements. It's no wonder they're getting nervous.

(on camera): Is it getting scary up here?

REPRESENTATIVE RAUL GRIJALVA (D), ARIZONA: It's not to the point of being scary yet, but it is heading in that direction.

(END VIDEOTAPE)

ACOSTA: Adding to the polarization in Congress is the fact that you have a steady stream of centrists leaving the capitol in recent years.

The latest Democrat Mike Ross, he's one of the last blue dog fiscally conservative Democrats to announce that he is retiring. And Republicans up on Capitol Hill are predicting confidently that he won't be the last. Kyra --

PHILLIPS: Well, Jim, the Tea Party has this rally set for this afternoon. What's the message there?

ACOSTA: Well, it's going to be interesting to watch because as you know, many of these House lawmakers coming out of the Tea Party Movement have been very instrumental in recent weeks.

We're going to be hearing from several of them up on Capitol Hill today, including perhaps a presidential candidate in Herman Cain. So this will be attracting a lot of attention and the message up there is going to be to the GOP leadership don't let us down, don't let the Tea Party down. It is a very big dynamic at play right now in these debt talks.

PHILLIPS: Jim Acosta in Washington. Jim, thanks.

Should Congress fail to raise the debt ceiling, one of the businesses that could be hurt the worst, the auto industry. Higher interest rates could make car loans too high for some buyers. At the bottom of the hour, reaction from California dealerships.

Al Qaeda on the brink of collapse. You know that headline is pretty catching and as Americans, it's something we love to hear. But how true is it?

The "Washington Post" is reporting that the CIA and other counterterrorism agencies are convinced that killing Osama Bin Laden plus years of drone strikes are soon to make al Qaeda terrorists extinct. This is our Reza Sayah's beat as you know. Reza, you live and work right there in Islamabad. What do you think? Do you agree with this?

REZA SAYAH, CNN INTERNATIONAL CORRESPONDENT: Well, Kyra, there's a lot of people in Washington especially right-wing groups who are still convinced radical Islam is the is the greatest threat to America and al Qaeda is public enemy number one and for someone to say al Qaeda is not a threat, they're going to say that's foolish.

But I think this "Washington Post" report is accurate and I don't think it says anything new. Based on what we've seen over the four years we've been here, al Qaeda as we knew it doesn't exist anymore.

And if it does exist, the overwhelming evidence shows it's in shambles. It's in disarray and it certainly doesn't have the capability to wage a global strategic war against a super power like the U.S.

Even so, for the past 10 years ever since 9/11, Washington has bombarded the American public with messages that al Qaeda is a global army, a global network with shadowy sleeper cells throughout scores of countries that are determined to attack America and destroy the American way of life.

The problem is there hasn't been any hard evidence to substantiate that. This year, a number of U.S. officials came out and said the number of al Qaeda operatives in Afghanistan is in the double digits, less than 100.

But the best evidence is looking back at the past 10 years since 9/11. Al Qaeda has not killed a single U.S. citizen on U.S. soil. They've been linked back to some plots and plans that have been foiled, but even those plots and plans like the underwear bomber, no one's verified that they're linked back to the organization created by Osama Bin Laden, Kyra.

So you put all that together and I think you see why a lot of people are starting to say al Qaeda is on the verge of collapse. And we're reporters, we're not here to give opinions, but if someone in America were to ask me if they should be worried about al Qaeda.

I'd say there's a lot of other things to be worried about in America right now, like the economy, jobs and this budget deficit and a government that can't seem to function.

PHILLIPS: And we should also point out too, we haven't had another 9/11, thank God. So something is definitely going right. Reza Sayah live from Islamabad. Reza, thanks so much.

All right, this is another story that's trending really high on cnn.com. Zain Verjee, we're talking about this 14-year-old kid charged in a Mexican court, known on the streets as "The Cloak." I mean, the murders are gruesome and it's one more child recruited by the cartel.

ZAIN VERJEE, CNN ANCHOR AND CORRESPONDENT, CNNI: It's really unbelievable. First of all, he's only 14 years old and the murders as you say totally gruesome. He tortured and beheaded at least four people. He was asked how did you execute them? Listen to his response, Kyra.

People are also finding outrageous too that he only gets a three year sentence in a correctional facility because of his age under Mexican law, that's the maximum that he can get. He also has to pay a $400,000 fine.

Kyra, the legal proceedings were closed to the public again because he's only 14 years old, but prosecutors called about 43 witnesses and he had zero witnesses. The people described him in the courtroom as being pretty calm and pretty relaxed.

There are also report that he'd tried go to Tijuana so that he could flee across the border back to the U.S., but this is really just something that underscores the fact that drug cartels are beginning to recruit and use teenagers and kids to do their dangerous dirty work.

PHILLIPS: They pay him a lot of money and they give him a bunch of false hopes and we see what happens.

VERJEE: Right, exactly. And it's just becoming a more pervasive situation as the drug cartel situation spirals out of control. And this is a really disturbing element, this level violence and the degree of youth also now being recruited.

PHILLIPS: Zain Verjee out of London. Zain, thanks.

The Army's flagship hospital closing its doors after more than 100 years. We're going to talk to one of our wounded warriors, one of our heroes. He's back on his feet thanks to the folks at Walter Reed. That's coming up at the bottom of the hour.

Plus, are you ready for some football? Better late than never for training camps. We're going to take you live to one them later in the newscast.

And the store known for everything in a big way is trying out a new strategy. Wal-Mart opening up small stores.

(COMMERCIAL BREAK)

PHILLIPS: Sad news topping our look at cross country this morning. Police in Utah say that Olympics skier Jarrett Speedy Peterson has taken his own life. You may remember last year in Vancouver. Peterson won the silver medal in the free style event. He was just 29 years old.

In Memphis, Tennessee kids will be going back to school despite that money war that almost put the school year in limbo. The school board as you may remember threatened to delay classes until it got 55 million bucks from the city.

Well, overnight, board members decided to let school start if the city meets a few conditions including a $12 million payment by August 5th.

And in Scenic, South Dakota, a saloon, dance hall, train depot, even a jail can all be yours for under 800K. You probably could be the mayor and sheriff, too, if you want to throw that in. The 12-acre town about 50 miles east of Rapid City is for sale on buy scenicsd.com. Put in your bid.

Alison Kosik joining us live from the New York Stock Exchange. She's actually following Wal-Mart. We told you about this. The store, Alison, known for doing everything in a big way. Now it's got a new strategy everything possibly in a small way.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Exactly. What a change, right? And depending on where you live is where you'll see these sort of smaller Wal-Mart stores.

One of them is opening in Chicago today, Kyra. It's called Wal-Mart Express. So the average Wal-Mart express is that it sits in about 15,000 square feet. That's about the size of a Walgreen's that you may walk into.

But the average of one of those huge Wal-Mart supercenters is 185,000 square feet. So think of it this way. The one opening in Chicago is the first Wal-Mart Express to open in an inner city area.

And they say it's a big test to see if the small format for Wal-Mart works. And if it's successful, we could see these Wal-Mart Express stores open in other cities.

We've already seen it in rural areas in Arkansas and North Carolina, and keep in mind of course these stores aren't going to carry the full product line that you see in the super stores. The smaller ones will emphasize food, health and beauty products, Kyra.

PHILLIPS: So what's the deal, is Wal-Mart downsizing?

KOSIK: It's not downsizing. What it's trying to do, Kyra, is try to stay competitive, you know, trying a new strategy. Because the fact is Wal-Mart sales have been dropping for about two years.

Also opening up a super center can be tough in a big city because there's less space available. Also we've always reported on this, all the opposition from local businesses.

That's led to zoning restrictions. So what this really is a way for Wal-Mart to get into the big markets without making a huge, huge splash, Kyra. PHILLIPS: All right, a quick check of the markets there.

KOSIK: All right, we are in the negative column. The Dow down 102. The Nasdaq off by 48. You know, investors still waiting on a deal yet on the debt ceiling.

Investors getting a little nervous about this. They are hoping for one, so the selloff isn't huge at this point. We also got a down beat durable goods orders report. Durable goods orders fell in June, not making investors too happy today, Kyra.

PHILLIPS: OK, Alison, thanks.

In this economy, it can be tough it find a job as we all know. Well, now is your chance to be seen and heard. You can give us your 30-second pitch right here on the air.

Tell us why someone should hire you. Send us an e-mail, the 30-second pitch at cnn.com and you may get a chance to make that pitch right here on the CNN NEWSROOM 10:00 a.m. Eastern Time.

All right, the debt crisis in Washington, the cost may be driven home next time you shop for a car. We'll explain.

Also, Alec Baldwin's tweet-a-thon. We're going to tell you what he revealed to fans.

And don't forget if you're walking away from the TV, it doesn't mean you have to stop watching. You can get CNN streaming live on your phone, computer, or maybe your iPad like I have up here. Check out cnn.com/video or just download the app and go.

(COMMERCIAL BREAK)

PHILLIPS: Alec Baldwin going on an hour's long binge on Twitter. Some of the details, well, pretty revealing to say the least. "SHOWBIZ TONIGHT" host A.J. Hammer live in New York with Baldwin's tweet-a-thon and more going on in the entertainment world. Hi, A.J.

A.J. HAMMER, HOST, "SHOWBIZ TONIGHT": Hi there, Kyra. You know you have a lot of time to kill when you're working on a movie set. It does look like Alec Baldwin is having some fun with his more than 220,000 followers on Twitter.

Alec is on location in Rome right now. He's shooting a Woody Allen film and while he's there, he's been taking questions from all of his fans. And he's been posting some very interesting answers.

Let me run down for you a bit of what I've learned in this Alec Baldwin Twitter Q and A. The film he's done that he's most proud of is "The Hunt for Red October." His first movie crush, Racquel Welch, good choice there.

And his favorite Republican, Teddy Roosevelt. Here are some other notable questions he's been asked of course the perennial boxers or briefs. His response was a thong. We assume, Kyra, he's either kidding or very uncomfortable.

Now one fan happened to ask him why are you so sexy, Alec? His response was a witty due to the generosity and blurry vision of people like you. So, Kyra, if you've ever wanted to ask Alec Baldwin a question, get on Twitter.

PHILLIPS: Yes, you and I should come up with a couple and see if he responds. He's a piece of work. He's got a great sense of humor. All right, Hugh Hefner's ex-fiance is spilling more than just the beans. Talk about a partying shot.

HAMMER: Yes, Hefner's runaway bride Crystal Harris decided that the Howard Stern show was the place to kiss and tell. Harris told Stern the world's most famous playboy doesn't quite live up to his reputation in the bedroom.

The almost wife of Hefner said that sex lasted, and I'm quoting here, two seconds. Harris is 24. She jilted the 85-year-old Hefner a few days before their wedding and went on to tell Howard Stern I'm not turned on by Hef. Sorry.

She also said they had sex just once and she's never seen him naked because he really doesn't take his clothes of, which kind of makes you wonder why she accepted his proposal in the first place.

Now I do need to report that Hef has just responded on Twitter, Kyra. This is what he posted about all this. Crystal lied about our relationship on Howard Stern, but I don't know why.

Adding, is she trying to impress a new boyfriend? So be they truth or lies, Kyra, you now know everything you have been wanting to know about what may or may not go on in the playboy founder's bedroom.

PHILLIPS: You know what? I want to keep the image out there. I don't want all those details. The rumors about the caves and all that. Let the legend live on, A.J. That's what I say. Let it live on.

HAMMER: Exactly.

PHILLIPS: All right, well, if you want all information including all those scathing details on Hugh Hefner, A.J.'s got it. "SHOWBIZ TONIGHT" 11:00 p.m. every night on our sister network HLN.

The nation's debt crisis, Washington bogs down, you may pay up. We're going to go to a car dealership for some of the hidden costs of the deadlock.

(COMMERCIAL BREAK)

PHILLIPS: Checking top stories now. Norway still on edge. Part of the main train station evacuated this morning after a suspicious package was found. Police say it was nothing. This comes just five days after 76 people were killed in a bombing and gun rampage.

The convicted Lockerbie bomber appearing on Libyan state TV attending a rally of pro Gadhafi supporters. Comes almost two years after he was released from a Scottish prison on the grounds he had terminal cancer.

In Texas, the jury has been chosen in the sexual assault trial of polygamist sect leader Warren Jeffs. He's charged with two counts of sexual assault on child and one count of bigamy.

All right, "Political Buzz." Your rapid-fire look at the hottest political topics. Three questions, 20 seconds on the clock. Playing today, Democratic strategist Maria Cardona, Sirius XM political talk show host and comedian Pete Dominick. And CNN contributor and talk radio host Dana Loesch.

Hello, guys. Oh, we'll zoom out on Pete there. OK, he's back with us.

OK, first question. David Wu resigns, so how will the Dems deal with an open seat at a time when they just can't afford to have an open seat? Maria?

MARIA CARDONA, DEMOCRATIC STRATEGIST: Well, it's an overwhelmingly Democratic seat, Kyra. President Obama won it by 62 percent. David Wu won it by 55 percent in a tough election cycle. The Democratic Campaign Committee is going to put a very robust campaign on the ground and air. Democrats have won every single competitive open seat in the last three cycles. I think we'll safely keep it in the Democratic column.

PHILLIPS: Dana?

DANA LOESCH, CNN CONTRIBUTOR: I don't think there's any concern about a Democrat not keeping that seat, especially if there's a special election or election in the future. But in terms of voting, I don't think Wu's vote right now matters because that's more than enough Republicans to get the job done. And plus, especially with the last cut, cap and balance pledge that went through, there were a handful of Democrats voting for it. So in the grand scheme of things, I don't think it really matters.

PHILLIPS: Pete?

PETE DOMINICK, SIRIUS XM RADIO HOST: Yes, I think the big loser here, Kyra, is Anthony Weiner. He is so jealous of Wu-nergate, David Wu because his crisis, his problem, didn't happen during this debt crisis when even the most apathetic Americans are paying attention to what happens in Washington.

But how will the Democrats deal? In all these special elections where Democrats have embarrassingly left or resigned like Jane Harmon and upstate New York, where it was Republican -

(BUZZER SOUNDS)

DOMINICK: -- it's Democrats that have won. Democrats are winning the special elections, at least in the House. PHILLIPS: All right. A new hash tag is out there. FU, Washington. And as you can imagine, it's collecting followers by the truck road, shall we say. Now in our digital age, what do you think? Is social media the best and quickest way to get your voice heard in Washington? Dana.

LOESCH: Oh, absolutely. I think the Tea Party movement which was preceded by the Don't Go movement, that organized so many conservatives across the country. I think it's a great way to get your voices heard. And plus, a lot of our representatives, a lot of our lawmakers are being a it difference to twitter. If they're not, then their aides definitely are. So, you see what people are saying about them.

You remove the middle man with social media. It's very effective.

PHILLIPS: Maria?

CARDONA: I actually agree with Dana on that. But I will add that as in everything, there is a method behind the madness. And the reason why this hash tag was able to go viral is because the gentleman who created it, Jeff Jarvis, had a very robust online presence, 76,000 Twitter followers. Many, many social media platforms.

So, you have to know how to do it in order to be effective. But an incredibly effective transparent online way to get your message out.

(BUZZER SOUNDS)

PHILLIPS: Pete?

DOMINICK: I don't think it's really helpful. I like Jeff Jarvis, but FU Washington could mean many different and contradictory things. As adorable as it is, Kyra, to see people saying the f word on Twitter, I think Congress understands the American people don't approve. They have like an 85 percent disapproval rating. If that doesn't motivate them to change, I don't think this will. I think we need a more cohesive and programmatic campaign --

(BUZZER SOUNDS)

DOMINICK: -- that tells them specifically what we want them to do.

PHILLIPS: I wonder what f word Pete's thinking about. He said other possible definitions. Hmm, we'll get back to that one. Maybe that should have been our Buzzer Beater.

DOMINICK: I was thinking fruit.

PHILLIPS: Fruit. Okay. Fruit you, Washington.

DOMINICK: What am I - what am I missing here, Kyra?

PHILLIPS: All right. Nothing. But you've got ten seconds to not miss this one. People are getting pretty creative - not only about their hash tags -- but expressing their frustration with Washington in other ways. Take a listen here to rapper Remi.

(BEGIN VIDEO CLIP)

REMI, RAPPER: Raise the debt ceiling limit, raise the debt ceiling limit, raise the debt ceiling limit.

(END VIDEO CLIP)

PHILLIPS: OK. I was kind of hoping for other lyrics besides just debt ceiling limit.

DOMINICK: Yes, who wrote that?

(LAUGHTER)

DOMINICK: Brilliant!

LOESCH: Very creative!

PHILLIPS: Bring in a lyricist. OK, I think we missed the other part. But what's the next pop culture revelation on the debt ceiling, guys? What do you think, what's the next thing we'll see? Maria.

CARDONA: Well, since the message needs to be really told to Republicans who are the ones who are not listening, I doubt they listen to rap, so maybe the messages should be written on cars in NASCAR, and maybe then they'll get the message.

PHILLIPS: Oh, interesting. OK. Maria?

CARDONA: Well - well -

PHILLIPS: I mean Dana! I'm sorry!

(LAUGHTER)

LOESCH: I would say Republicans are listening. CNN's own poll shows that 66 percent of Americans supported cut, cap and balance. The majority of voters overwhelming support it and in various polling. The Republicans are listening. Democrats joined in with that.

It was Harry Reid and this president that knocked it -

(BUZZER SOUNDS)

LOESCH: -- to the ground. And I think people living within their means. That's the next pop culture revelation! I'd love to see a song on that. '80s style.

PHILLIPS: Pete -- Eighties style! Boingo boingo?

DOMINICK: I have the answer.

LOESCH: Capitalism! Best song ever.

PHILLIPS: Go ahead, Pete.

DOMINICK: I'm pitching a show right now called Capitalism Isn't Patriotic. No, I'm pitching a show called America's Race to the Bottom where cameras will follow people who vote against their own economic interests and watch them as they continue to lose. It's really going to be great.

LOESCH: Oh, that's brilliant! That's brilliant.

DOMINICK: That's my reality show.

PHILLIPS: You are a reality show, Pete. That's for sure. Marie, Dana -

DOMINICK: Thank you, Kyra, thank you.

PHILLIPS: -- and Pete, thank you three. All right.

The nation's debt crisis, it could cost -- or the cost, rather -- could trickle down to you in many ways. We've talked about them all: the higher interest rates, the fewer loans, renewed reluctance to spend your money.

CNN's Sandra Endo is actually at a car dealership in Los Angeles, but the political debate is very much providing a backdrop there for you, Sandra.

SANDRA ENDO, CNN CORRESPONDENT: Absolutely, Kyra. It's businesses like this one that will feel the direct impact of a stalemate in Washington.

The economy is already tough. This dealership wants to move these Jeeps off the lot. They've had to slash prices.

But it's going to get even harder, Kyra, if Washington lawmakers don't come together on a deal. That means interest rates as you mentioned will go up. Car loans will be harder to come by and more expensive. So, a tough situation all around.

And I'm joined by the general manager of sales here, Ron Wheeler. You've been watching what's going on in Washington, you listened to the president's speech a couple of nights ago. What are you making of all this?

RON WHELLER, GENERAL MANAGER OF SALES, BUERGE CHRYSLER & JEEP DEALERSHIP: Well, you know, Sandra, all I can tell you is that it's really had a negative impact on automotive sales. Typically, July is a pretty strong month for sales, but it's really taken a big dip.

ENDO: Already an impact?

WHEELER: Oh, absolutely. People do feel it, and it's just a very nervous time for us right now. ENDO: So, the car industry itself is already hurting because people don't have a lot of money to spend, but you think it will get even worse out there for people who want to buy a car.

WHEELER: Well, you know, if Washington can't get together, it's really only going to get worse. I can't stress, you know, the negative impact that it's really, really had on our volume. And our gross. You know, lending is already tough as it is. It's just bad. It's terrible.

ENDO: And what do you think about everything that's been said on Capitol Hill from the president to the Republican side, you've been listening to this debate?

WHEELER: I have. I have. I've been watching it and I think it's really a tragedy that President Obama and the Republican party can't seem to come to some compromise that's really going to obviously affect our credit rating, which is going to cause interest rates to go even higher.

ENDO: Absolutely. It's a tough situation all around, Kyra. So, really the effects could be very devastating. So Washington, get it together.

PHILLIPS: Sandra Endo live out of L.A. Sandra, thanks.

Coming up, after more than 100 years, Walter Reed Hospital is closing its doors. We'll actually talk to a wounded warrior who is pretty darn thankful for the Army's flagship hospital and get his take on what he thinks about this end of history.

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PHILLIPS: Since 1909, our military's wounded warriors have depended on Walter Reed Army Medical Center. From General Pershing to President Eisenhower to today's troops fresh from the front lines.

In those 102 years, medical methods have changed. But the commitment to care and healing our heroes has never wavered. Walter Reed is closing its door, and it's tough for people like Army Staff Sergeant Dale Beatty to hear that. He was actually wounded in Iraq in 2004 when an IED ripped open his Humvee. His first stop state side, Walter Reed where surgeons had to amputate both his legs.

Dale, it's really great to see you. You and I have talked a lot about Walter Reed and what the hospital, the therapists, the doctors did for you. I bet you'll never forget waking up in that hospital room.

STAFF SGT. DALE BEATTY, U.S. ARMY (ret.): No, never. And I was really fortunate to have the best of the military welfare and medical care system throughout my entire journey from the battlefield to Walter Reed. And it was the right place for me to be for my recovery.

PHILLIPS: And, Dale, what do you remember about what they said to you and how they got you through a really dark time? I mean, you were not in good shape physically or mentally, but the folks who you dealt with there truly made an impact on you.

BEATTY: Well, it's their job, for one. But they wouldn't be in that profession, none of the doctors, none of the nurses, none of the physical therapists, would be in that profession unless they truly invested in taking care of people. And really that's what I got the most of out of Walter Reed was how much everybody cared, from the chief of staff on down to various department heads who were full colonels. All the way down to the corporal who was drawing my blood at 3:00 in the morning. Everybody really cared about the welfare of the patients there.

PHILLIPS: And seeing the other warriors there in the therapy rooms, you know -- and we're looking at a picture of your wife and your son. This is right when you got back. I love this picture, your family was so incredibly supportive of you and your time there at Walter Reed.

But when you were in therapy and you were talking with these other warriors, there was a bonding that took place among all of you as well, right?

BEATTY: Oh, most definitely. Encouraging each other, sometimes giving each other a hard time if that's what the situation required. But most of all, looking around, and you can always find somebody worse than you. Especially myself, I was there as a double amputee, and I look across the mat and there's a guy who is a triple amputee. And even now, we have some members who are quadruple amputees.

So, you can always look around and find somebody worse. You can always look around and find a source of inspiration. And we were fortunate enough that Walter Reed is a large enough base where the families could be there, too. So, you're always seeing little kids running around. And it makes you feel good. It makes you -- that makes you comfortable and able to rehab.

PHILLIPS: And I've watched that through the years with you. You've inspired me tremendously, especially on the golf course. You're a heck of a golfer.

And I want to take an opportunity to plug Dale's Web site. It's called PurpleHeartHomesUSA.org. And I'm just going to brag about you for a second, Dale. He started this charity and what Dale does is he gets out there with other guys and builds homes for wounded warriors, also now getting his hands on foreclosed homes and making those available to our wounded warriors. Once again Purple Heart Homes. Check out the Web site. Support Dale. It's a great cause.

Dale, thanks so much for talking with me today.

BEATTY: Thanks, Kyra. Good to see you again.

PHILLIPS: Likewise.

Well, Congressman Luis Gutierrez busted outside the White House yesterday. It was a protest over immigration reform. We'll hear from him and ask him what made him decide to do this. (COMMERCIAL BREAK)

PHILLIPS: Illionis Congressman Luis Gutierrez, a Democrat, arrested outside the White House. Grabs your attention, doesn't it? Grabbed our attention yesterday, as well. He was actually protesting immigration reform.

How did he do it? Old-school sit-in. Why an old fashioned way of protesting? Let's ask him. Luis Gutierrez joining me from Washington.

Actually the first chance anyone's had time to talk to you since the arrest. I guess, that's my first question, Congressman, why did you decide to stage your protest in this manner, in this way?

REP. LUIS GUTIERREZ (D), ILLINOIS: Well, on Thursday as was reported, the president spoke at the probably oldest and most memorable civil rights organization of the Latino community here in the United States, National Council of La Raza. And he once again told the audience there was nothing he could do, skirting his responsibility and the broad discretionary powers that the president has to grant relief on immigration issues.

And when he said he couldn't do it, the audience just responded, Kyra, saying, yes, you can, yes, you can. And so yesterday, we were there to say our immigration system is broken, it has a destructive corrosive effect on families. There are four million American citizen children. Some of them were left without parents yesterday, some of them will be left without parents today. That's wrong.

The president has the ability. Twenty-two U.S. senators have implored this president to say to a million DREAM eligible immigrant young men and women --

PHILLIPS: But Congressman, let me ask you, though, I mean, I understand why you were out there protesting, and -- but I want to ask you. The form of protest that you chose. Did you get the ear of the president? Did you get what you wanted from staging this type of protest?

GUTIERREZ: I think what is important is that when you se actions of the government that are having this kind of destructive effect on families -- look, Kyra, I have to tell you, I know there is a soldier in Chicago who is being sent to Afghanistan. We were able to limit the deportation of his wife for one more year. We need to tell that soldier you can be free to go and give us our freedom in Afghanistan without --

PHILLIPS: I know. Congressman, Congressman - I -- I don't want to debate the DREAM Act, I don't want to immigration right now. All I want to know is do you feel you achieved what you wanted to achieve by getting arrested, by staging a sit-in? Did you make any progress with getting the attention of the president or the lawmakers?

GUTIERREZ: You know what, you know what? You do raise the issue. It's an issue that is important. And if my -- denying myself my own personal liberty and putting my own body and my own reputation at stake so that we can raise the issue, it is well worth it. And I think we did do that.

And I think we need to continue to do that. This is a cumulative effect, and we will continue to fight and to challenge a president of the United States that made a promise to me, that made a promise to a community of people, and isn't keeping that promise. He can be our hero.

PHILLIPS: That's true. And it is a community that supported him by 67 percent in 2008. So, we'll continue to follow this. Congressman, it was an interesting way to get your message across yesterday.

GUTIERREZ: Thank you.

PHILLIPS: We will talk again.

Coming up, the 2011 pro football season begins today after more than a four-month long layoff. We'll take you live to one of the team training camps next.

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PHILLIPS: Well, as you know, the labor lockout drama came to a close. You're going to get your football. So, of course, where is one of our biggest football fans today? Carol Costello, what else, Baltimore Ravens training camp, one of her favorite teams.

So, are they ready?

CAROL COSTELLO, CNN CORRESPONDENT: I'm ready. I'm ready, Kyra. Not much action going on here yet. In fact, most of the action is taking place, oh, in that building. Lots and lots of meetings today Actual training on the field doesn't take place until maybe tomorrow.

This the Ravens' year-round training camp. It's in Owings Mills, Maryland. Normally, the Ravens would be training in Westminster, Maryland, but they're not because the preseason is shortened which is bad news for fans because they can't watch the Ravens practice.

It's also bad news for Westminster because Westminster loses out on all that money from the fans coming into watch the team.

So, the players have put together this YouTube video, knowing that the fans are disappointed in this and also disappointed because of the stress they felt because the football season may not begin, so they put together this YouTube video thanking fans for their patience.

The coach of the Ravens also happy that football will start on time.

PHILLIPS: And question to you. Now, this time we got it right, Carol. We're seeing the players, and they're thanking. And we ran a little bit in your honor just a short time ago when we were talking about it. You know, we had one of the players from the Falcons here yesterday talking about -- he was actually involved with the negotiations, talking about the outcome here and that even when they had not struck a deal, they had been practicing. They put together their own training camps, if you will, to get ready for the season. They still wanted to be prepared.

I mean, there in Baltimore, did the same thing happen? Were the players still keeping in shape? Were they talking strategy? Were they still doing their own kind of mini-practices, if you will, to be ready for this?

COSTELLO: Yes, I think a lot of players did that. But the problem is you don't know how much effort they really put into it. I'm just speaking from the owner's perspective and the coaches' perspective. They want to know if these players are ready to go. A lot of players today are going through physicals to make sure they're in physical shape to take place in the practices that will happen tomorrow.

PHILLIPS: Carol Costello, live from Baltimore. Let us know how it goes. Thanks, Carol.

All right. Just a couple minutes before the top of the hour. Suzanne Malveaux is going to be taking over here in the CNN NEWSROOM. We'll take a quick break. We'll be right back.

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