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Trying to Solve Debt Debacle; Economy Grows at Sluggish Pace; Police: Fort Hood Attack Averted; Paralyzed, But Still in the Game; Risking the U.S. Credit Ratings; Texas Welcoming Rain From Tropical Storm
Aired July 29, 2011 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SUZANNE MALVEAUX, CNN ANCHOR: Live from Studio 7, I'm Suzanne Malveaux.
Want to get you up to speed for this Friday, July 29th.
"We are almost out of time." Those words from President Obama just moments ago. The deadline for raising the country's debt limit now just four days away, and Congress and the White House still gridlocked over what to do. The president says there are plenty of ways out of this mess, but the clock is ticking.
(BEGIN VIDEO CLIP)
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: What's clear now is that any solution to avoid default must be bipartisan. It must have the support of both parties that were sent here to represent the American people, not just one faction. It will have to have the support of both the House and the Senate.
(END VIDEO CLIP)
MALVEAUX: A lot of you understandably angry, frustrated over this debt standoff. And you've been telling us about it.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Disaster.
UNIDENTIFIED MALE: Ridiculous.
UNIDENTIFIED MALE: Joke.
UNIDENTIFIED FEMALE: Irresponsible.
UNIDENTIFIED FEMALE: It's pitiful.
UNIDENTIFIED MALE: Stupid.
UNIDENTIFIED MALE: Ridiculous.
UNIDENTIFIED FEMALE: Horrible.
UNIDENTIFIED MALE: Complex. UNIDENTIFIED MALE: Pitiful.
UNIDENTIFIED FEMALE: Disastrous.
UNIDENTIFIED MALE: I think it sucks.
(END VIDEO CLIP)
MALVEAUX: One word.
Well, almost two years after the Fort Hood shooting spree, police have stopped another attack on the post. They arrested an AWOL American soldier after FBI agents found potential bomb-making materials in his hotel room. Private First Class Nasser Jason Abdo reportedly told investigators he wanted to attack troops at Fort Hood. His arrest, triggered by a tip from a gun shop salesman.
(BEGIN VIDEO CLIP)
GREG EBERT, GUN SHOP SALESMAN: The last thing in the world that I would accept would be an accolade as being some kind of hero. I'm not. I'm just an average guy.
(END VIDEO CLIP)
MALVEAUX: In Norway, a day to honor the victims of last Friday's deadly bombing and shootings. Mourners gathered this morning for a memorial service in Oslo.
These scenes just moments after last week's bombing near a government building in the Norwegian capital. The bombing and shooting spree killed 76 people, and today police are questioning the suspect for a second time.
NATO planes continue to hammer Libya, but despite gains on the battlefield, rebel fighters just lost their top commander. General Abdul Fatah Younis was killed in the port city of Benghazi. It's not clear how he died. His supporters say rebel leaders were about to question him about alleged ongoing ties to Moammar Gadhafi.
Meanwhile, the woman who told the world that she'd been raped by Gadhafi's forces and then fled for her life is now living in the United States. Eman al-Obeidi flew to New York late last night, then boarded another flight to a final undisclosed location.
Torrential rains have moved out of South Korea, but there's a chance for more rain this weekend. Areas around Seoul have gotten pounded this week with the heaviest rains in a century. The death toll is at least 51.
(BEGIN VIDEO CLIP)
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: And I've brought you here to one of the inner city streams to show you just how radically the water levels have receded. On Thursday, I wouldn't be able to stand on this bridge. There was a ferocious torrent of water that was coming down here. The paths on both sides were completely covered and the water levels were several feet higher.
(END VIDEO CLIP)
MALVEAUX: The maker of Tylenol is changing the recommended maximum daily dosage to reduce accidental overdoses from eight Tylenol pills a day to just six a day. Earlier this year, the FDA asked all drug companies to limit acetaminophen in an effort to reduce the risk of liver damage.
Well, the former astronaut who attacked a romantic rival is forced to retire from the Navy. Prosecutors said that Lisa Nowak drove from Houston to Orlando wearing NASA diapers to avoid making pit stops. She attacked a woman who was dating her former love interest. Nowak served a year on probation under a plea deal. And, by the way, her lawyer denied that she wore those diapers.
Well, more now on the debt standoff and the crisis that is getting more urgent with each passing hour. So you have House Speaker John Boehner trying to wrangle enough votes to get his plan through the House. Then you have Senate Majority Leader Harry Reid. He's pushing for the Senate to move ahead, as well.
President Obama says the two sides are not that far apart. Now, Boehner's plan would hike the debt limit by $900 billion now, $915 billion in cuts over 10 years or so. But it would also require a second vote. Reid's plan would raise the debt limit by $2.7 trillion now, with $2.7 trillion in savings.
CNN's Joe Johns joins us from Washington to talk about all of this, the latest behind the scenes, the arm-twisting that's going on.
Joe, first, I understand that there might actually be a vote that's taking place early, early Sunday morning, or perhaps Monday -- late Sunday, early Monday. Tell us, where are we in this process?
JOE JOHNS, CNN CORRESPONDENT: Yes. Well, this would be all part of the legislative chess game. Senator Harry Reid, going to the floor, giving the broad outlines of it, saying it's time for him to act on his proposal because the House is tied up in knots, or whatever. And behind the scenes, people are making the case that, look, in order to get something onto the floor of the Senate, voted on in time to meet this August 2nd deadline, they would have to have a vote as early as Sunday morning, 1:00, 2:00 Sunday morning, which would put them into a legislative session on Tuesday, where they would take that vote Tuesday, being August 2nd, the deadline day, which would mean that the House of Representatives, which has been doing all this dawdling so far, would have very little time to act. They'd have to decide to move quite quickly.
So this chess game, muscle flex, whatever you want to call it, this is hard ball at the United States Capitol right now.
MALVEAUX: Joe, we're calling it a hot mess, essentially.
Does either Boehner's plan or Reid's plan stand a chance of passing? JOHNS: Well, we are also hearing -- and I don't think this has been fully reported out yet on CNN over TV -- but we're also hearing that there was some talk last night that the Republicans who were holding out wanted a balanced budget amendment included in some form or fashion in the Boehner bill. And now we're hearing that there are going to be attempts to take an amendment and put it into the Boehner bill and pass it out, which might get some extra votes and get Boehner over the top.
So passing out of the House of Representatives, once again, looking like a bit more of an optimistic idea. Meanwhile, though, we're told it's dead on arrival in the United States Senate.
MALVEAUX: So is there another plan then in place, Joe, if both of these, the House the Senate plans flop? What happens next?
JOHNS: Well, OK. Well, we've got Senator McConnell, the Republican Leader over on the Senate side, has some of his ideas. They're hoping to meld some of those in and see what comes out of all of this. But they're running out of time.
MALVEAUX: OK. Yes. Clearly, they're running out of time. Joe, thank you very much.
We'll be following all of those various votes and twists and turns.
Appreciate it, Joe.
(NEWSBREAK)
(COMMERCIAL BREAK)
MALVEAUX: CNNMoney.com's lead story now. The economy grinding to a halt here. We are talking about growth in the first quarter slower, much slower than first expected.
We're also getting a quick check of the markets here. The Dow Jones, down by 14 points or so. Keeping a close eye on that.
We are also looking at another story. Wall Street has more to worry about today than just the debt crisis. We're talking about a new report that shows that the economy grew at a sluggish pace during the second quarter of this year, and growth in the first quarter was even slower than folks thought. All of that, plus the debt limit stalemate, is making investors a little uneasy.
Our senior correspondent, Allan Chernoff, he's joining us from the New York Stock Exchange.
Allan, what's the biggest concern now? It seems to be the GDP report. Is that right?
ALLAN CHERNOFF, CNN SR. CORRESPONDENT: Well, if we look in a rearview mirror, certainly the GDP report confirms to us that things were not good during the first half of the year. In fact, worse than we had thought, as you just mentioned.
During the second quarter, we had growth of only 1.3 percent. To put that in perspective, normal growth is closer to three percent. That's what the economy really should be growing at to increase jobs, for the economy to seriously move forward. So we were only at 1.3 percent, less than half of that anticipated, expected normal growth rate.
And during the first quarter, even worse. Only 0.4 of one percent. That is not even a snail's pace for the economy. Bad news.
MALVEAUX: That is bad news, Allan. Corporate managers, how do they see all of this, this gridlock? Is it affecting jobs?
CHERNOFF: Yes. Let's add in what's been going on in Washington. Right?
Corporations around the country, even around the world, they depend very much on government spending. Right? So, if the government is stuck in gridlock, if they don't raise the debt ceiling, that means government is not going to be spending money.
Well, when government spends money, they hire contractors, they hire companies to do their building, to do their projects. It money is not coming out of Washington, why should any companies spend money? Why should they buy equipment? And why should they hire people?
So this is serious stuff. It's not only affecting what's going on in Washington, it's affecting people around the nation, especially those folks who are out of work right now.
MALVEAUX: All right, Allan. Not good news, but news that we need, nonetheless. Thank you.
(NEWSBREAK)
(COMMERCIAL BREAK)
MALVEAUX: Police in Texas may have stopped an attack on Fort Hood before it could get under way. The suspect, an AWOL American soldier, is due in court the next hour. He is now under arrest after potential bomb-making materials were found in his hotel room. A retired police officer who now works in a gun shop tipped off police.
Here's CNN's Ed Lavandera.
ED LAVANDERA, CNN NATIONAL CORRESPONDENT: Suzanne, Private First Class Nasser Abdo will be making his first court appearance at a federal courthouse in Waco. He's accused of planning a deadly attack on Fort Hood soldiers.
(BEGIN VIDEOTAPE)
EBERT: It's a Springfield XD.
LAVANDERA (voice-over): From the moment Greg Ebert set eyes on Nasser Abdo, he says something didn't seem right.
EBERT: He shows up here in a taxicab. How many people go shopping at gun stores in a taxicab?
LAVANDERA: The Army private spent about 20 minutes inside the Guns Galore gun shop in Killeen, Texas. Ebert says Private Abdo acted very guarded and asked odd questions.
EBERT: He selects these six canisters, brings them to the counter, sets them down, and that's when he asked Kathy (ph), "What is smokeless powder?" Well, hello? Why are you buying this if you don't know what it is?
LAVANDERA: Ebert says Abdo then spent almost $250 on a handgun magazine, three boxes of shotgun shells, and six pounds of smokeless gun powder.
EBERT: Rang it up, he paid cash, took his bag and left without the receipt or his change.
LAVANDERA (on camera): Left without his change?
EBERT: Yes. It wasn't much, like 18 cents, 20 cents.
LAVANDERA (voice-over): Ebert is a retired 20-year law enforcement veteran. It was that old cop's hunch that convinced him to report the suspicious customer to local police. Within 24 hours, officers hunted him down and say they unraveled Abdo's horrifying and deadly plan.
DENNIS BALDWIN, KILLEEN POLICE CHIEF: We have interviewed him and have the information as a result of that interview as well as other leads that we're following up on.
UNIDENTIFIED REPORTER: During the interview --
BALDWIN: Let me finish -- let me finish my statement. That leads us to believe that military target -- personnel was targeted.
LAVANDERA: But police say this attack wouldn't have occurred inside Fort Hood like the deadly massacre in 2009 where Major Nidal Hasan allegedly gunned down 13 soldiers. Instead, authorities say Abdo planned on attacking soldiers in popular gathering spots around Killeen just outside Fort Hood.
UNIDENTIFIED MALE: How close was he to pulling this off?
BALDWIN: That's a good question, and I can tell you that we would probably be here today giving a different briefing had he not been stopped.
LAVANDERA: Law enforcement sources tell CNN bomb-making materials were found in Abdo's room inside this Killeen, Texas, hotel. Another source says Islamic extremist literature was found in his backpack. Fort Hood is still hurting from that deadly massacre two years ago and Greg Ebert can't help but think about what might have happened this time had he not called police.
EBERT: I would be devastated, especially considering that I might have played some role in someone being injured, seriously injured or killed. That would be very unsettling.
(END VIDEOTAPE)
LAVANDERA: Nasser Abdo had gone AWOL back on July 4th after authorities near Fort Campbell, Kentucky, had charged him with possessing child pornography. After that, he went missing, and no one really knew where he was until he turned up here in Killeen -- Suzanne.
MALVEAUX: Thanks, Ed.
Here's a look at today's "Choose the News" stories. You can vote for the story you'd like to see in the next hour.
First, a mother's addiction passed on to her newborn baby. A shocking firsthand look at a new mother who admits taking Oxycodone during her pregnancy and is worried it's hurting her daughter.
Second, South Korea is facing an increasing number of cyber attacks on its military and financial Web sites. Well, now the country is employing cyber soldiers to protect its most important servers.
And third, art show meets technology at a unique display in New York. We're going to take you on a tour of the human interaction with technology display. You're going to see futuristic items that could soon be a part of your everyday life.
You can vote by texting "22360."
Text "1" for Born Addicted; "2" for Cyber Soldiers; or "3" for Technology Art Exhibit.
The winning story is going to air in the next hour.
Well, a Wisconsin man who grew up in poverty vowed since he was 12 that he would always help people in need. Well, this CNN Hero spent most of his adult life making good on that promise. Through a local newspaper column, he invites people who have fallen on hard times essentially to write him letters. And then he hits the road to see them.
(BEGIN VIDEOTAPE)
SAL DIMICELI, CNN HERO: When I go through suburbia America, or the small towns, everybody is trying to hold their head up with pride.
You've been looking for work? OK. I know it's tough in a recession. UNIDENTIFIED FEMALE: I went and sold all my jewelry yesterday.
DIMICELI: These people behind closed doors, they tell their neighbors they're fine. They soon go in the house and starve.
How much do you owe right now?
UNIDENTIFIED FEMALE: The gas bill, I owe about $800.
DIMICELI: I find the situation is getting worse. They need food. They need help with their utilities. I mean, this is 2011 in America? We should be helping each other.
I'm Sal Dimiceli. And my mission is to help my fellow Americans who have fallen on hard times.
In a week I'll receive 20 to 30 letters. "Me and my family are in desperate need of help. We do not want to become homeless."
I want to verify it's genuine, and I want to give to them as quickly as possible.
I know right now it's tough for everybody, but we'll be here for you, we'll help you out.
I tell them how I grew up in poverty and how I understand.
Here's $100 for gas.
I help people with necessities of daily life and, at the same time, I get them together to do a budget so they can continue to survive.
I brought this for you so you can get your wedding band back.
I want them to feel free of that pain.
UNIDENTIFIED FEMALE: I'm so happy.
UNIDENTIFIED FEMALE: Thank you.
UNIDENTIFIED MALE: Thank you.
DIMICELI: I want them to feel the compassion that we're trying to share with them, to wrap our arms around them and say, come on, I have a little extra strength I want to share with you, and let's get you back on your feet.
(END VIDEOTAPE)
MALVEAUX: Remember all CNN Heroes are chosen from people that you tell us about. So, to nominate someone you know who's making a big difference in your community, go to CNNHeroes.com.
Well, if you're like many of us, you're trying to wrap your head around this whole debt limit crisis. Think of it like a credit card. Our CNN's Richard Quest, he uses the analogy to break it down for us -- up next.
(COMMERCIAL BREAK)
(NEWSBREAK)
MALVEAUX: Between the anger, frustration, debt limit debate comes with a lot of numbers, a lot of plans. Well, politicians are bickering over billions and trillions of dollar, but it really all comes down to credit and how much the United States owes.
Our CNN's Richard Quest, he's breaking it down.
(BEGIN VIDEOTAPE)
RICHARD QUEST, CNN INTERNATIONAL CORRESPONDENT: I want you to think of the current crisis in terms of a credit card. It's been issued by U.S. taxpayers and bondholders, the bank of borrowers, and it's been issued to the U.S. government.
Now, needless to say, the government has a platinum credit card. It can borrow money and has done for many decades. This credit card has fueled the U.S. economy.
Well, now the credit card bill has arrived, and it shows a story state of affairs. Overspending at over $118 billion a month, with no sign of major reduction. And that spending, well, you and I spend for clothes and meals and movies. In this case it's defense, Medicare, Social Security. But there's actually very few areas that you can cut back on.
This is pretty much all that can be cut. The rest, sacrosanct. So that's the scenario under which the overspending takes place.
The U.S. credit card that we've just shown you has a debt limit much as you and I would have. In fact, exactly as you and I would have. But in the U.S. case, it's $14.3 trillion.
Now, when you and I overspend, we ring the bank and say, raise the limit. The U.S. has done that 74 times since 1962. Interestingly, the year I was born.
What has happened now with that credit card? The bank has basically said August the 2nd is the date when you can no longer borrow anymore. There are some people who suggest it may be August the 15th when the cash runs out. It doesn't really matter which it is. When all is said and done, the credit card bill has arrived. The credit card is groaning under its own weight. And the U.S. government has been told by borrowers it's time to stop spending.
Richard Quest, CNN, London.
(END VIDEOTAPE)
MALVEAUX: We got it, Richard.
Well, a reminder to vote for today's "Choose the News" story. Text your vote "22360."
Text "1" for Born Addicted, a mother's account of taking a painkiller OxyContin during her pregnancy and her fears about the drug's affect on her newborn.
Text "2" for Cyber Soldiers, South Korea's new defense against hacker attacks and its own military and financial websites.
Text "3" for Technology Art Exhibit, it's a unique showcase of futuristic items that could be a part of everyday life.
Winning story is going to airs in the next hour.
(COMMERCIAL BREAK)
MALVEAUX: Ground Zero workers are furious over a decision this week by the government not to cover cancer treatment for responders who got sick after 9/11. At a town hall meeting last night, people sounded off about what happened after the dust settled at the World Trade Center.
(BEGIN VIDEO CLIP)
GEORGETTE DWYER, 9/11 WITNESS: They are our heroes. We haven't even thanked them.
This is how we thank them? It's sad. It's immoral. I mean, here, we should be trying to work our best to try to do whatever we can for 'em. We waste so much money in so many other locations. I mean, there should be more money for fund.
And what happens to -- now, we have a victim relief (ph) funds. What happens to those funds after there's no more? What happens to all the other people that haven't had a chance to claim their claims?
(END VIDEO CLIP)
MALVEAUX: Well, the Centers for Disease Control says there's simply isn't enough scientific data yet to draw a link between working at Ground Zero and cancer.
Motocross champion Doug Henry is used to breaking some bones, nature of the sport. But one wipe out paralyzed him from the waist down, and despite that awful event, Dr. Sanjay Gupta says that Henry is back on his bike and he's proving that others can overcome tragedy.
(BEGIN VIDEOTAPE)
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (voice-over): Four-time National Motocross Champion Doug Henry's racing career has taken him to incredible heights and devastating lows. He's been inducted into the American Motorcycle Association's Hall of Fame and won dozens of medals and trophies over the years.
And look closely. You'll see this bike is modified with a bar and strap that help him stay on. Because four years ago, the unthinkable happened and he was paralyzed.
DOUG HENRY, MOTOCROSS CHAMPION: When I hit the wall between the bike, you know, I was stuck between the bike. You know, it was the end. It was the end for me. It was -- it was all over.
GUPTA: Henry's love affair with racing began when he was four. At 15, he entered his first race, had a mid-air collision and broke his arm.
After turning pro at the age of 20, Henry had another bad accident and broke his back for the first time. But he recovered. Two years later, he was back on the track.
There were more injuries. Over 200 serious crashes, but he always walked away, until March 4th, 2007. He lost control on a corner during practice.
HENRY: I knew it was over. I just -- everything. Just -- dancing. I wasn't much of a dancer. Oh but I knew I wasn't going to be. I thought about all of the things that we couldn't do or wouldn't be able to do together.
HENRY: It got worse. Two weeks later, his wife Stacy was diagnosed with breast cancer but, together, they got through it.
Henry is partially paralyzed from the waist down but it hasn't stopped him from competing. He's modified a snowmobile and a dirt bike to race in X-game competitions designed for disabled athletes and he's winning races in his new sport.
Henry hopes he can motivate others whose lives have suddenly taken a detour and help them get back to doing what they love.
HENRY: I try to do as much as I can now and enjoy the day, just try to get the most out of my life.
GUPTA: Dr. Sanjay Gupta, CNN, reporting.
(END VIDEOTAPE)
MALVEAUX: And last November, the family was hit with another tragedy. Their house burned down. But instead of focusing on that, Henry looked at the positives. His wife is in remission, the kids are OK, and he says: No matter what, don't give up on your dreams.
It's just an amazing story. Amazing guy. His family as well. All the best to him.
Well, the debt debate is dragging down the public's opinion of leadership in Washington. We're going to have the results of a new CNN poll that says people are fed up with the fighting.
(COMMERCIAL BREAK)
MALVEAUX: A reminder to vote for today's "Choose the News" story. Vote by texting "22360." Text "1" for Born Addicted, a mother's shocking firsthand account of taking the painkiller OxyContin during her pregnancy and her fears about the drug's affect on her newborn.
Text "2" for Cyber Soldiers, South Korea's new defense against hacker attacks and its military on financial Web sites.
And text "3" for Technology Art Exhibit, it's a showcase of futuristic items that could soon be a part of everybody's life.
The winning story is going to air in the next hour.
Well, the debt debate seems to be getting uglier. The public is starting really to get fed up with Washington and its leadership. Paul Steinhauser, part of "The Best Political Team on Television," joining us from the political desk in Washington.
So, Paul, you know, a lot of people are frustrated about this. I understand that there's a poll that shows that this might be costing politicians quite a bit in credibility.
PAUL STEINHAUSER, CNN DEPUTY POLITICAL DIRECTOR: Oh, yes. A lot of Americans fed up with what's going on right here in Washington and the leaders who try to deal with this.
Let's take a look at this new poll from Gallup and it asks, do you approve or disapprove of how these leaders are handling the debt ceiling negotiations and crisis. Look at that. These numbers are not so good there.
Forty-one percent giving the president the thumbs up on the issue. That goes down to 31 percent for John Boehner, the House speaker. And only about a quarter of Americans this poll indicates are giving Harry Reid, the Senate majority leader, a thumbs up on how they're handling negotiations.
So, Suzanne, more proof I guess you could say that Americans don't think the leaders here are doing a good job. They just want the leaders to get the job done -- Suzanne.
MALVEAUX: Yes, that's right. And what about how they're
STEINHAUSER: Get it done.
MALVEAUX: Yes, get it done.
What about how they're using this in their political ads?
STEINHAUSER: Yes. I guess coming soon or coming right now to a television near you. We've seen this in the last couple of weeks and it's only heating up, these ad wars from both sides. The newest ad from a bunch of progressive groups and unions, this ad going up today in eight states across the country and it's targeting Republican lawmakers for how they're dealing with the debt crisis and blaming them. And you know what? Earlier this week, Republican groups were backing Republican candidates were doing the same thing, going up with ads targeting Democratic lawmakers and also targeting the president.
So, a lot of ads on both sides dealing with the debt crisis. I guess some local television stations and cable networks are making some ad revenue, but it just shows how big this struggle is right now politically, Suzanne.
MALVEAUX: You know, it's adding a lot of fodder, too, for the comedians.
Today's punch line goes to Conan O'Brien. I want you to take a listen.
(BEGIN VIDEO CLIP, FROM TBS/TEAM COCO)
CONAN O'BRIEN, "CONAN": Our government is days away from being broke.
Congress' latest plan is to see how much cash they can get for John McCain on antiques road show.
Thirty-three soldiers from the Mexican army were allowed to return to Mexico yesterday after they accidently crossed the border into America. Did you hear about that?
That's right, folks. Think about it. Things have gotten so bad in this country that people are only crossing the border now by accident.
According to a recent survey, this year, kids are receiving an average of 40 cents less under their pillows from the tooth fairy.
Yes, the economy is bad even make-believe people are feeling the pinch.
(END VIDEO CLIP)
MALVEAUX: I don't know, Paul, he tried, don't you think?
(CROSSTALK)
STEINHAUSER: I tell you, this crisis is giving late night comics a lot of fuel right here. No doubt about it.
But, unfortunately, it's not a laughing matter. So, you know, hopefully, something will happen this weekend, Suzanne.
MALVEAUX: All right, we're going to be paying close attention -- and, obviously, all the comedians, as well.
STEINHAUSER: Yes.
MALVEAUX: All teasing aside -- new report now mentions that there is one American company with more money on hand than the government. Who do you think it is?
Also, it's bigger and brighter and now even easier to find CNN's most compelling video. We're going to invite you to check out the bolded new look of CNN.com's groundbreaking new video experience at CNN.com/video.
(COMMERCIAL BREAK)
MALVEAUX: So one of the biggest concerns in this whole debt limit debacle is the risk to the U.S. credit rating. The major agencies are warning of a downgrade in the country's AAA rating and some investment chiefs say that the damage has already been done.
(BEGIN VIDEO CLIP)
JIM ROGERS, CHAIRMAN, ROGERS HOLDINGS: First of all, in the real world, it has moved. Anybody who knows about economics knows that the U.S. is no longer a AAA credit.
Now, yes, Moody's and Standard & Poor's doesn't seem to know that, but Moody's and Standard & Poor's said that Fannie Mae was a AAA credit till it went bankrupt, the day went bankrupt. Don't pay any attention to them, they've very rarely been right about anything.
STEPHEN ROACH, MORGAN STANLEY: In the eyes of most serious investors, including the Chinese, there's already been a downgrade, whether the rating agencies validate that or not is beside the point.
(END VIDEO CLIP)
MALVEAUX: I want to bring in our Christine Romans of our Money Team from New York.
Christine, is this true? Is the country's credit rating, the standing already been hurt by all of this because we've come so close to this deadline?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Look, many folks are saying, Suzanne, that even if there were a miraculous deal right now to raise the credit limit, our credit card limit or the debt ceiling, you still have the United States in political disarray in the eyes of the world, you still have long-term unsustainable structural deficits that have to be fixed, and you clearly have Washington who is not on the same page, and many investors, global investors, are saying it looks as though Washington is unable, unwilling or simply doesn't understand well enough to understand how to get this fixed. So that is an ongoing problem for the United States.
Now, the irony here, of course, is that with all this uncertainty, the safest and most liquid investment in the world still happens to be the United States Treasuries. So that seems to be one of the little ironies here is that you still have people talking about that as the safest places to put your money.
But, you know, Merrill Lynch coming out and saying that they don't see a deal getting done right now, they expect a partial government shutdown for about a week, they expect a ratings downgrade, a lot of other people saying they expect a ratings downgrade at this point because they just don't like what they're seeing in Washington.
MALVEAUX: And tell us about this GDP report. How concerned should we be?
ROMANS: You know, the GDP report was weak and it add as wrinkle to this whole thing because does it mean that you cannot risk messing up the debt ceiling and having an immediate cut back this government spending that would hurt a very weak economy, again, and make it weaker?
Suzanne, the first quarter of the year, we've now learned, that the economy only grew 0.4 percent. That is not good at all.
There you can see a bar chart, shows you the depths of the recession on the left. Then it looks like the economy started to crawl out of the ditch. And then look, those last two bars I want you to look at, 0.4 percent in the first quarter of the year, the second bar there, the very last one, 1.3 percent was the growth in the second quarter. That is not good enough to lower the unemployment rate. That is not good enough to show an economy that is finding its footing. Very worrisome, especially if you're talking about a quick pull back in spending out of this economy in its fragile state.
MALVEAUX: And, Christine, I want you to take a look at the next story. It's kind of unbelievable here.
Apparently, Apple, the computer company, has more cash on hand than our federal government. According to "The Financial Post," Apple's cash reserve is $75.8 billion; Washington has a total operating balance of $73.7 billion right now.
But I understand we shouldn't feel too badly, after all, well, I guess, Apple's the second largest company in the world. they got $363 billion in issued stock, so.
ROMANS: It shows you that Apple is a very rich company with a lot of cash on hand.
MALVEAUX: What does it say about us though? What does it say about our government? That's what I'm worried about.
ROMANS: You know, $73 billion is an awful lot of money. But, you know, we're spending more than we bring in. I mean, every dollar the U.S. government spends to run our country, Suzanne, 38 to 40 cents of it is borrowed. I mean, think of that.
MALVEAUX: Wow.
ROMANS: So, yes, we run in very big numbers in the government, and I guess the Apple bank account is very big as well.
MALVEAUX: There's a lesson in here somewhere, I guess.
ROMANS: I know. Yes, more money than I have or you have. MALVEAUX: All right, Christine, have a good weekend.
ROMANS: You, too.
MALVEAUX: Tropical Storm Don takes aim at Texas, but that could be a good thing for the parched state. We're going to go live to Padre Island.
But first, Americans are making progress paying down their personal debt. In the past year, people in 44 states cut the amount they owed on credit cards, auto loans and mortgages. That's according to a group, Credit Karma, but we are still pretty big on borrowing.
Well, Maryland residents have the third highest personal debt. They owe an average of $263,000. Hawaii is the second highest.
So the question is: What state has the highest average personal debt? That answer coming up in a moment.
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MALVEAUX: Well, who has the highest level of personal debt in the country? Californians. Residents on an average of $336,000 in credit card payments, home and car loans. But not to beat up on California, it's also one of the top states in reducing personal debt over the past year. So they got to work all that out, I guess.
Well, the heads of a media empire, News Corp, were recently grilled by the British Parliament about their involvement in a sprawling hacking scandal currently rocking the United Kingdom, and the investigation hit home. Our own Piers Morgan, host of CNN's "PIERS MORGAN TONIGHT" was mentioned during the hearing.
From 1994 to '95, Morgan was the editor in chief of the "News of the World," a British publication owned by Rupert Murdoch. He went on to edit a rival paper, "The Mirror," from 1994 to 2006.
Well, during the hearing, Louise Mensch, a British minister of Parliament, accused Morgan of admitting to hacking into private voicemails in his memoire, "The Insider." The allegations, those allegations, are in incorrect. There is no such admission of guilt in the book, as Morgan has made clear on this network.
Now Mensch is retracting her statement and releasing an apology. In a letter released today, she writes, "I wrongly stated that Piers Morgan, formerly editor of "The Daily Mirror," had been open about personally hacking phones in a book he wrote. This was based on my misreading of an article in "The Daily Telegraph."
Morgan maintains that he has never been involved in or was aware of any hacking at the "News of the World" or "The Mirror" during his time as editor.
Well, rumors on Twitter that Morgan was suspended from CNN are also incorrect. Tropical Storm Don has Texas now in its sights. Right now, folks along the coast are making last-minute plans for the storm's arrival. While they don't want the wind, they could certainly use the rain.
Our CNN's Rob Marciano is on Padre Island.
Rob, how are things going there from where you are? Any sign of the storm yet?
ROB MARCIANO, AMS METEOROLOGIST: Well, you can see the clouds off in the distance, but for the most part, it has been status quo here in the state of Texas for the past month or so, and that means you are getting a sunburn, and that's still the case right now.
Folks here on the beach just east of Corpus Christi, well, they're doing what they do summertime on a Friday, right? This is what a lot of folks do, and that's enjoying the beach. They are not out here to looky-loo, they're out here to surf on the title pool and take a dip in the ocean.
But it is starting to shirt (ph) up now, and it will be a different scene tonight come 12 hours. Obviously, darker, but the rain will come in as will the wind.
As far as the satellite picture and the stats of this thing, it has not gained much intensity. It's right around a moderate size and strength tropical storm with winds at 50 miles per hour, just over 200 miles to my south and east and heading in this direction.
The landfall, the forecast track of the National Hurricane Center brings it somewhere between Corpus Christi right here and Brownsville. Landfall expected to be tonight as a moderate to strong tropical storm.
So, minimal impact as far storm surge and winds. There may be some power outages here, they might shutdown some bridges. But the rainfall will be beneficial. Texas in a long-term, long-term drought.
And a lot of folks that come down and vacation during the summertime are from Texas. We caught up with one woman form Dallas, and she know all too well just how hard the drought has hit this state.
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TIFFANY SUNDAY, DALLAS RESIDENT: From what I'm hearing from the people I know and my family that are in the ranching and farming industry, it is pretty bad because there simply is no water and no food to feed the cattle, and then you can't graze the land cause there's no water and everything is burnt.
So we have taken a big financial hit here in the state of Texas and it's very obvious when you drive through the state.
(END VIDEO CLIP) MARCIANO: Well, we drove here yesterday afternoon from San Antonio to Corpus Christi. A lot of parched land, a lot of cotton fields as well. A lot of farmers have switched their crops to cotton because it's drought resistant, and now that cotton is come into harvest.
And if there's not enough double-edged swords to this somewhat good news story, is that the cotton, when you want to harvest it, you don't want rain, you want it to be nice and dry. It gives it quality and it obviously gives it a better yield.
So most people want the rain and want it seriously, there is a serious dent that needs to be made. And we're only going to get maybe two, three, four inches of rainfall from this, and in a lot of cases, between Houston and San Antonio, they are over a foot below average as far as rainfall.
It has been a long time since the U.S. has seen a tropical storm, over 700 days. Tropical Storm Arlene, last year, hit just south of here in Mexico, and they are hoping that Tropical Storm Bob (sic) makes a direct hit later on tonight with some beneficial rains across the state of Texas -- Suzanne.
MALVEAUX: All right, hoping the best for them. All right, thanks, Rob, appreciate it.
A reminder to vote today for today's "Choose the News" story. Text your vote by texting "22360."
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